IBA Compliance Connection

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We use the Thumbprint Signature Program® offered through the IBA. A non-customer came in to cash a check, and we requested her thumbprint. She refused saying that it is illegal to require a thumbprint. I assume she is wrong, but how do I respond?

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admin

You are correct that requesting thumbprints from non-customers prior to cashing their checks is not illegal. Neither Illinois nor federal law prohibits this practice, and it is a simple way to reduce check fraud. The OCC has implicitly endorsed fingerprinting programs, provided that they are applied consistently and non-discriminatorily.

We also note that a bank is not required to cash checks for non-customers. Illinois courts have held that if someone does not have an account with a bank, that person lacks standing to sue the bank for wrongful dishonor of a properly payable check under the UCC (which provides a cause of action only for a bank’s accountholders). Consequently, you may wish to explain to the non-customer that your thumbprinting policy is legal and that allowing an exception for her may appear discriminatory. If she does not wish to provide a thumbprint in accordance with your policy, you may exercise your right not to cash her check.

For resources related to our guidance, please see:

  • OCC, Check Fraud: A Guide to Avoiding Loss, page 16 (February 1999) (“Some financial institutions have seen a reduction in check fraud by inkless fingerprinting of non-customers who seek to cash checks . . . Any financial institution that implements this type of plan should adopt procedures to help ensure that it is not applied on a selective basis.”)
  • Johnson v. First Banks, Inc., 889 N.E.2d 233, 235 (5th Dist. 2008) (“Pursuant to the plain language of the [Uniform Commercial] Code, the plaintiff, who does not have an account with the defendant, is not a ‘customer’ and therefore lacks standing to pursue a cause of action against the defendant for a wrongful dishonor.”)
  • Kronemeyer v. U.S. Bank Nat. Ass’n, 857 N.E.2d 686, 689 (5th Dist. 2006) (“Section 4-402(b) confers no cause of action on the holder of an allegedly dishonored item. Accordingly, the plaintiffs have no standing to pursue a cause of action against U.S. Bank for a wrongful dishonor. the plaintiffs have no standing to pursue a cause of action against U.S. Bank for a wrongful dishonor.”)