In this issue of Community Banker, we examine account liability questions and check fraud prevention.

An excerpt:

YOU ARE ASKING …
Q: Our customer’s account was compromised, and an unauthorized party presented checks with forged signatures. Who ultimately bears the loss when forged checks are paid – the bank or the customer?

A: Generally, the drawee bank is responsible for recognizing the signature of its customer. If the bank fails to return a check before midnight of the banking day following the banking day of presentment, liability typically rests with the bank rather than the customer. (See our discussion below for details and applicable case law.)

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