Stolen checks and forged checks have always caused problems for anyone with a bank account. However, check fraud is becoming more common because anyone with a computer and a scanner can easily duplicate checks or replace the names on the checks while the account number remains. The increase in check fraud has led to changes in laws that previously placed most of the liability on the bank for failing to catch the forgery.
Laws prohibit banks from paying checks out of a customer's account if the check does not contain the customer's authorized signature. However, banks are not required to physically examine every check. The customer bears the responsibility of examining bank statements to determine if any unauthorized checks have been written.
New laws now require the customer to notify the bank of possible forgeries within a reasonable time after receiving her bank statement. The customer who fails to notify the bank in a timely manner, not exceeding 30 days, is precluded from asserting that the bank wrongfully paid the check. However, even if the bank did wrongfully pay the check, the customer may still be partly liable under the law.
My checks have been stolen. What do I do?
You must contact your bank immediately and notify them that your checks have been stolen. The bank will look for forgeries as the checks come in. Close the account as soon as any outstanding checks you have written have cleared.
TIP: There is no federal law limiting the amount you are responsible for if your checks are stolen and forged. State laws require banks to make sure checks are not forged, to some extent. However, you must notify the bank that forgeries are a possibility.
TIP: You can stop the stolen checks from being accepted at retailers who use a check verification company when your check is processed during a purchase by notifying the check companies. The store clerk will be unable to process the check. Warn the following companies that your checks are being forged and should not be accepted:
- TeleCheck: 1.800.710.9898 or 927.0188
- Certegy, Inc.: 1.800.437.5120
- International Check Services: 1.800.631.9656
What is an affidavit of forgery?
It is the document that is signed by you before a notary public in which you state you have not authorized use of your checks. The bank will require you to make an affidavit.
Should I close my account?
Yes; however, forged checks that come in and "bounce" are reported to the check verification agencies. You will then be reported to collection agencies or even pursued for prosecution. It is likely that your credit rating will decrease.