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Signature Stamp Liability

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Question: 
We have a customer who had just decided to use a signature stamp. Should we have something on file that states this is how he intends to sign his checks from this point forward? What is our liability?
Answer: 

Although a court case over the validity of a facsimile signature is likely to be decided in the bank's favor, it's the bank's prerogative to refuse to honor such a signature without something in the deposit contract (often added in a rider document) that puts the burden on the customer for the use of the stamp. Such a document can also include caveats to the customer concerning security for the stamp and controls over its use. I suggest requiring that a rider to your deposit contract be composed by counsel and signed by your customer.

First published on BankersOnline.com 10/16/06

First published on 10/16/2006

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