Fraudulent Checks
Protecting Your Business From Check Fraud

The Problem Check Fraud: A Growing Threat to Businesses

Discovering forged checks cashed against your business account is a serious issue. This article addresses the steps to take when facing this type of financial crime, offering practical advice and outlining the resources available to recover lost funds.

In this case, a business owner discovered forged checks, totaling around $14,000, cashed from their account. Despite reporting the fraud, filing a police report, and notifying the bank, the bank initially refused to return the funds. This is a common issue, and understanding your rights and the steps you can take is crucial.

Immediate Actions What to Do Immediately After Discovering Forged Checks

Immediately report the fraud to your bank and the police. Providing detailed information about the forged checks, including dates, amounts, and check numbers is crucial. Also, gather all supporting documentation, such as copies of the forged checks and any correspondence with the bank.

Contacting an attorney is also a wise step. They can review your situation, advise you on your rights, and help you navigate the legal process. They can also advise on which legal statutes apply.

Navigating Bank Response Understanding Bank Responsibilities and Your Recourse

Banks have a legal obligation to protect their customers from fraud. According to the Uniform Commercial Code (UCC) 4-401, funds should not have been withdrawn from your account if the checks were forged and not properly payable. If the bank fails to meet its obligations, you may have grounds for legal action.

If the bank is uncooperative, escalate the issue to higher-level bank managers. If this fails, consider filing complaints with the FDIC (Federal Deposit Insurance Corporation) or the CFPB (Consumer Financial Protection Bureau). These agencies can investigate your complaint and put pressure on the bank to resolve the issue.

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"Banks have a legal obligation to protect their customers from fraud. If the bank fails to meet its obligations, you may have grounds for legal action."

Legal Expert

Regulatory Bodies Understanding and Their Roles

The FDIC primarily insures deposits, but also investigates consumer complaints regarding banks. The CFPB is a federal agency responsible for consumer protection in the financial sector. Your state Attorney General's office might also be a resource for addressing fraud.

The specific agency to file a complaint with may depend on your situation. For instance, if the bank is federally insured, the FDIC might be involved. If the issue relates to unfair or deceptive practices, the CFPB could be involved.

Next Steps Taking Action and Recovering Your Funds

Document all communications with the bank, the police, and regulatory agencies. Keep copies of all correspondence and records. This documentation will be essential if you need to pursue legal action.

If the bank refuses to cooperate, consider consulting with an attorney and filing complaints with the appropriate regulatory agencies. Persistence is crucial to recover your funds and protect your business from future fraud.