Last week I told Brenda’s story: A grandmother whose granddaughter had stolen money from her. We were able to file a police report and get the money back, but during the process I found a website with such valuable information about the rights of victims of fraud — but it was presented so poorly. I decided to take one for the team and brave the Department of Treasury’s 1990s web aesthetic and usability to bring you the important stuff, all in one place:
- Even though a bank pays over a forged endorsement, it is the account holder’s responsibility to discover the problem and notify the bank.
- Financial institutions are generally required to reimburse customers for forged checks. However, based on individual circumstances, the bank can investigate to determine if the customer is entitled to a reimbursement…However, if the bank can prove two things—that it accepted the check in good faith and exercised ordinary care and diligence in handling the transaction—it may not be liable.
- If your actions—the way the check or checkbook was handled, issued, completed, or made payable—contributed to the making of the forgery, you may be at least partially liable. Generally, the bank will require you to complete an affidavit. It may also request that you file a police report.
- You are responsible for reviewing your periodic statement. Generally, if there were multiple problem transactions from the same person, you have 30 days from the statement date to find the error and inform the bank. However, if there is one problem transaction, you generally have up to one year after the statement date to notify the bank. (Please note: the time period for this prompt notification may vary by bank and State.) Your deposit agreement specifies your bank’s specific time requirement.
- If you have an account with multiple forgeries (e.g., stolen checks), you should consider closing the account.
The Treasury Department’s recommendations mirror what Brenda’s family and I did after discovering the forgeries. The most important takeaway from this experience isn’t that you should give lie detector tests to all of your children — the moral is to keep an active eye on your checking account. And if you can’t, get help with that!