Answer:
This is one of the most active subjects on Bankers' Threads. The answer depends, in part, on the states in which the depositary bank and the paying bank are located.
If both banks are located in states that have adopted changes to articles 3 and 4 of the UCC that include warranties that the consumer on one of these drafts authorized it, the item becomes one subject to the transfer and presentment warranties, and it appears you can ship it back (without entry) under a warranty claim for 3 years (shorter period in some states).
If, however, one or both of the banks is/are in a state where these changes have not been adopted, the item is a midnight deadline item, and you may/should be rebuffed for reason of late return if you try to ship it back to the depositary bank.
Do a search in Bankers' Threads for the phrase "unauthorized draft" (include the quotes) on All Forums, and you'll find a wealth of discussion on this subject.
First published on BankersOnline.com 8/16/04
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