No, we do not believe you should issue a stop-payment order on the cashier’s check. The Illinois Supreme Court has held that a cashier’s check is the equivalent of cash. As a general rule, once the cashier’s check enters the stream of commerce, the issuer is liable under the UCC if it refuses to honor the cashier’s check when presented (one example of an exception being when the person presenting the cashier’s check is the same person who fraudulently ordered the issuance of the check).

We also do not believe you should charge the customer for the amount of the fraudulent cashier’s check, as it was not properly payable, since your customer never authorized its issuance. Therefore, we believe your bank is likely to be liable in the event that the cashier’s check ultimately is presented to the bank.

We should note that this issue is treated differently by some other states around the country.

For resources related to our guidance, please see below:

• Midamerica Bank, FSB. v. Charter One Bank, FSB., 905 N.E.2d 839, 846 (2009) (Illinois Supreme Court held that the UCC generally prohibits stop payment orders on cashier’s checks)
• Illinois Uniform Commercial Code, 810 ILCS 5/4-401 (a bank may charge the customer for an item that is properly payable, and an item is “properly payable” if “it is authorized by the customer and is in accordance with any agreement between the customer and bank.”)