Limits on Reg CC’s indemnity for losses from mobile deposits

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Question:

My bank wants to make an indemnity claim against a bank that accepted a mobile deposit of a $1,200 check that we accepted in paper form three days later. We learned from the paying bank that the mobile deposited check was indorsed with only the payee’s signature (which is all we got on the paper check when it was deposited with us. We charged the check back to our customer’s account, creating a $500 overdraft, and we have learned our customer has left the country. Can we recover the full amount of the check?

Answer:

The indemnity amount cannot exceed the amount of the loss, plus interest and expenses of the indemnified bank, including costs and reasonable attorney’s fees and other expenses of representation. So, the base amount in your case is $500 (the overdraft amount). If you have incurred costs directly related to legal efforts to recover the funds, they may be added to your claim.

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