Topic: Unauthorized Transactions
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If an employee forges a check with the name of the authorized signer, would the bank be liable?
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The general rule as to forged checks is that the customer is not liable. 810 ILCS 5/3-401, 3-403
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What rules apply when a business customer seeks restitution from a bank after an employee of the customer stole money from the customer’s deposit account? In this case, an employee forged checks that were made out to “CASH.”
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Employees who make checks out to “CASH” present a special problem that has been addressed in several Illinois cases. These cases have held that banks are potentially liable for failing to detect forgeries when employees cash out checks drawn on his or her employer’s account that are made out to “CASH.” See, e.g., Mutual Service…
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May a bank adopt a policy of not checking for multiple signatures on checks?
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The risk in adopting a policy of not checking for multiple signatures is that customers may have rights to reimbursement under the UCC if you pay fraudulent checks that have only one signature (and customers might also sue for breach of contract unless your deposit agreements state that you will not check for multiple signatures).…
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Are banks responsible for verifying signatures on checks to prevent the payment of forged checks?
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Customer vs. Bank Liability Under the UCC, banks are not responsible for verifying signatures on checks, but a payor bank will be liable to a customer for paying a forged check if the customer informs the bank of the forgery with “reasonable promptness.” The general rule as to forged checks is that the customer is…
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What are the time limits for returning an item containing a forged endorsement?
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The depository bank warrants to the drawee bank that an item does not contain any forged or unauthorized endorsements and that the depository bank had the right to enforce the payment of the item at the time it was transferred to the drawee bank for collection. Notice of a claim for breach of this warranty…