Immediate Actions to Take ly
Discovering that a check you wrote has been stolen and fraudulently cashed is a serious breach of your financial security. The moment you realize this, time is of the essence. The first step is to contact your bank's fraud department to report the unauthorized transaction. This will help prevent further fraudulent activity and allow the bank to potentially freeze the account.
Next, file a police report with your local police department. This creates an official record of the theft, which your bank will require for its investigation. Having this official documentation is crucial to the recovery process. Make sure to obtain the police report number; you will need this as part of your claim.
Essential Information Needed for Your Bank Claim
To file a formal claim with your bank, gather the necessary information beforehand to streamline the process. You will need the specific check number, the exact dollar amount of the fraudulent transaction, and the date the check was cashed. Also, have the name of the original, intended payee available.
You will need a copy of the cashed fraudulent check from your bank, which shows both the front and back of the check. Make sure you have your police report number ready as well. Providing all this information will help your bank quickly investigate the fraud and begin the process of returning your funds.
Bank's Formal Claim Procedure
The formal claim process with your bank typically involves completing an "Affidavit of Check Fraud." This document is a sworn legal statement in which you affirm, under penalty of perjury, that you did not authorize the transaction and that the endorsement on the check was forged. Ensure all the information is accurate and complete.
Your bank will have specific submission procedures, which may include submitting the affidavit and supporting documents in person at a branch, or via mail or through a secure online portal. Follow your bank’s instructions carefully to ensure a smooth and efficient claim process.
“Protect your financial security by taking immediate action and understanding your rights.
LegalClarity Team
Key Takeaways & Actions
Ensure a swift resolution to check fraud
Report to Your Bank
Contact your bank's fraud department immediately to report the stolen check.
File a Police Report
Obtain an official police report documenting the theft; your bank will need this.
Gather Required Information
Compile essential details such as the check number, amount, and payee to expedite the claim.
Financial Liability and the Uniform Commercial Code (UCC)
The Uniform Commercial Code (UCC), specifically Articles 3 and 4, outlines the rules for determining financial liability in cases of check fraud. Under the UCC, the bank that accepted the forged check for deposit (the depository bank) is generally liable for the loss. This bank has a responsibility to ensure the endorsement is valid.
Your bank, the payor bank, is responsible for refunding the money to your account because a check with a forged endorsement is not considered “properly payable.” As the account holder, you are protected as long as you were not negligent. Negligence might include signing a blank check or failing to report the fraud promptly.
Investigation Timeline for and Reimbursement
The reimbursement timeline depends on how the check was processed. For checks processed electronically, federal law under Regulation E provides consumer protections. Financial institutions have 10 business days to investigate a reported error.
If the investigation takes longer, the bank must issue a provisional credit to your account for the disputed amount, and can take up to 45 days to conclude the investigation. For traditional paper checks, the UCC governs the resolution, but doesn’t always mandate a provisional credit timeline, so the timing can vary.