Who is liable for forged checks

Even if you do not balance you checkbook, review the checks. If you see anything that looks unusual, alert your bank immediately. Personal Finance Budgeting. Who Is Liable for Forged Checks? By Ganine Gambale. Forged checks are a significant problem. The Forger. Processing a payment actually takes longer than days. Your bank accepts the deposit based on your identification — they have no information about the source of the check.

Your bank then sends the check to the source. The real company does not become aware of these charges until they appear on their statement. Until the bank confirms that the funds were actually deposited into your account, you are responsible for any funds drawn against that check. In addition to collecting funds from you, the bank may also charge a fee, particularly if the reversal results in NSF checks, etc.

Banks may also freeze or close your account or take money from other accounts you have at that bank, bring suit against you to recover the funds, or report you to a checking account abuse database i. In some cases it is possible that law enforcement could bring charges against victims because it may look like they were involved in the scam and knew the check was counterfeit.

What rights do you have? Ordinarily, you would seek repayment from the person who wrote the check to you.

A bank paying a forged check may not charge the amount of the check against the account of the person whose name is forged. Any loss resulting from the payment of a forged check must be borne by the drawee or payor bank. Most states have a statute of limitations or time limit by which you must file a claim against a bank for processing forged checks.

Typically the time limitation for filing a suit runs from the date on which the depositor makes a demand of the bank for reimbursement for the amount of the forged checks. From this time the depositor has one or two years to file his suit depending on the state.

If it is not, or your bank refuses to answer questions about a potential forged check, you may wish to contact a finance lawyer who can speak with the bank, and figure out the best course of action for you. Ken LaMance. Ken joined LegalMatch in January Since arriving, Ken has worked with a wide assortment of talented lawyers, paralegals, and law students to grow LegalMatch's Law Library into a comprehensive source of legal information, written in a way that is accessible to everyone.

Ken holds a J. Jose Rivera. Law Library Disclaimer. Court decisions have already established guidelines for legal responsibilities, and failure to meet these guidelines can cause a bank or company to experience financial loss. UCC Revisions now define responsibilities for check issuers and paying banks under the term ordinary care.

Under Sections a and a , a bank can charge items against a customer's account only if they are "properly payable" and the check is signed by an authorized individual. However, if a signature is forged, the corporate account may be liable if one of the following exceptions applies: According to UCC Section 7 , ordinary care requires account holders to follow "reasonable commercial standards" prevailing in the area for their industry or business.

Section also requires customers to reconcile their bank statements within a reasonable time to detect unauthorized checks.