Topic: User Authentication
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We use an Affidavit of Alteration, which customers use to report forgeries and alterations, including a forgery of the customer’s signature on an endorsement. However, I don’t think customers should use this form to claim that a payee’s endorsement was forged on the customer’s check. Should we use the Affidavit of Alteration form in those cases?
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We recommend modifying your Affidavit of Alteration form in cases involving a payee’s forged endorsement on a check, or using a separate form entirely. We agree that in most instances, a customer will not be able to verify that a third party payee’s endorsement was forged. But if a customer notifies your bank that a…
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We received a Fedwire transfer request and paid the funds into our customer’s account. The next day, we learned from the originating bank that it very likely was a fraudulent transaction (related to an email scam), where someone impersonated the originator to initiate the transfer. The originating bank has requested that we return the funds, and we froze our customer’s account before he could withdraw the funds. We have confirmed the identity of the originator and originating bank and obtained a copy of the originator’s police report. Do we need any other documentation before returning the funds?
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No other documentation is required. The process of returning the wired funds is not governed by any laws or regulations related to Fedwire transfers. We recommend reviewing your account agreement with the customer to ensure that you are within your rights in freezing and removing funds from the customer’s account (which is likely in this…
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Can we put a stop payment order on a cashier’s check that our bank issued? The customer has been the victim of identity theft and did not order the cashier’s check.
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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…
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Is there a law requiring us to continue mailing deposit account statements after several have been returned to us as undeliverable? The phone number we have on file has been disconnected, but we are seeing continued debit card transactions on the account.
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We are not aware of any law or regulation that would require you to continue mailing periodic statements in this situation. Our recommendation is to place a freeze on the customer’s account, which should cause the customer to contact the bank, at which point you will be able to collect the customer’s updated contact information.…
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Are there any laws or regulations that require us to verify customer address changes (change of address notifications)?
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There are a few legal guideposts that apply to customers’ change of address requests, including general guidance on change of address requests and two regulations that apply only in specific instances, all of which are discussed below. Note that the guidance is not considered mandatory, but the regulations’ requirements are mandatory. Regulatory Guidance on Change…