Do we need to obtain ink or wet signatures on stop payment orders? Do we need a written acknowledgment of stop payment orders?

Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA.

No, we believe that you may accept electronic signatures for stop payment orders. Both Illinois and federal law provide that an electronic signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” In addition, we note that the Uniform Commercial Code (UCC) does not require you to obtain signatures on stop payment orders — although this may be required by your bank’s policies or procedures.

Customers should provide written acknowledgments of stop payment orders that are made orally. However, the requirement to confirm oral stop payment orders in writing could be eliminated by revising your deposit agreements and disclosing this policy to your customers. This would slightly increase the risk that customers might challenge your execution of a stop payment order, and we recommend that you consult with bank counsel before revising your account agreements and policies.

For resources related to our guidance, please see:

Electronic Signatures in Global and National Commerce (ESIGN) Act, 15 USC 7001(a)(1) (“A signature, contract, or other record . . . may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”)

Electronic Commerce Security Act, 5 ILCS 175/5-110 (“Information, records, and signatures shall not be denied legal effect, validity, or enforceability solely on the grounds that they are in electronic form.”)

UCC, 810 ILCS 5/4-403(b) (“A stop-payment order is effective for 6 months, but it lapses after 14 calendar days if the original order was oral and was not confirmed in writing within that period. . . .”)

UCC, 810 ILCS 5/4-103(a) (“The effect of the provisions of this Article may be varied by agreement, but the parties to the agreement cannot disclaim a bank’s responsibility for its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. . . .”)