Signature Forged-BOFD for Collection?

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Question:

I have a commercial customer who had her signature forged on payroll checks in her January statement. Can these items be sent to the BOFD for collection now that we are in early May?

Answer:

Brian Crow:

Most likely no. Unless your institution and the BOFD have an agreement through a correspondent relationship to share forgery losses, your institution will be liable. Under your state's uniform commercial code, the responsibility to identify a forged signature is yours and forgeries must be returned by your midnight deadline.

The BOFD would have no way of identifying a forgery since they do not have an account agreement or a signature card for your customer.

Answer:

Randy Carey:

Check your commercial depositor's agreement also, failure to notify the bank for 4 months may also put the loss on the commercial customer