# So my roommate is getting Free Money, what the heck? **URL:** \ **Category:** Factual Questions\ **Created:** [April 5, 2005, 7:00am UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811 "2005-04-05T07:00:12Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![galt](https://avatars.discourse-cdn.com/v4/letter/g/35a633/32.png) [@galt](https://boards.straightdope.com/u/galt)\ **Post date:** [April 5, 2005, 5:57pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/41 "2005-04-05T17:57:31Z")
As soon as I bought my first house, started getting several of these loan checks a week, for absurd amounts. I’d be in deep doody if I’d cashed any of them. I like to pretend I’m so wealthy I just throw away checks for huge amounts without batting an eye… “Oh, look, honey, it’s another check for sixty thousand dollars…” \ ---
**Author:** ![Sunspace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sunspace/32/1250_2.png) [@Sunspace](https://boards.straightdope.com/u/Sunspace)\ **Post date:** [April 5, 2005, 6:36pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/42 "2005-04-05T18:36:12Z")
I never heard of these loan cheques before. Are they a US-only thing? ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [April 5, 2005, 7:02pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/43 "2005-04-05T19:02:34Z")
> [@Zette](#): > > Agreed on the loan check- I’m pretty sure that’s what it is. If I were him, I’d be checking to see if I could legally get out of the loan quickly. He’s going to owe a slew of money otherwise. If he didn’t sign or deposit them, how could he possibly be legally obligated to cover the loan? And I haven’t seen these loan checks before either. Is there a page anywhere with pictures? ---
**Author:** ![Rube\_E.Tewesday](https://avatars.discourse-cdn.com/v4/letter/r/f0a364/32.png) [@Rube\_E.Tewesday](https://boards.straightdope.com/u/Rube_E.Tewesday)\ **Post date:** [April 5, 2005, 7:11pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/44 "2005-04-05T19:11:32Z")
> [@iamthewalrus(:3=](#): > > If he didn’t sign or deposit them, how could he possibly be legally obligated to cover the loan? > > And I haven’t seen these loan checks before either. Is there a page anywhere with pictures? The argument would be that his mother was acting as his agent in depositing them, and that he is bound by the acts of his agent. I don’t know squat about United States law, so I don’t know if that argument would succeed, but in any case he’d stand a good chance of dealing with a mean collection agency. I, too, have never heard of these loan cheques before, and I thought I’d encountered a goodly number of scams and semi-scams. ---
**Author:** ![tofergregg](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@tofergregg](https://boards.straightdope.com/u/tofergregg)\ **Post date:** [April 5, 2005, 7:13pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/45 "2005-04-05T19:13:36Z")
This is a _great_ topic. Please keep us posted as your roommate’s court date approaches. -Tofer ---
**Author:** ![gazpacho](https://avatars.discourse-cdn.com/v4/letter/g/6f9a4e/32.png) [@gazpacho](https://boards.straightdope.com/u/gazpacho)\ **Post date:** [April 5, 2005, 7:15pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/46 "2005-04-05T19:15:45Z")
The load checks I have seen say on them somewhere that they are not negotiable. The mail looks like it contains a check but really contains advertising material for some kind of loan. ---
**Author:** ![Random](https://avatars.discourse-cdn.com/v4/letter/r/57b2e6/32.png) [@Random](https://boards.straightdope.com/u/Random)\ **Post date:** [April 5, 2005, 7:18pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/47 "2005-04-05T19:18:38Z")
> [@iamthewalrus(:3=](#): > > If he didn’t sign or deposit them, how could he possibly be legally obligated to cover the loan? Arguably, because his agent (Mom) accepted the offered loan by depositing the check into his account. _Arguably_\*. I get so-called cash advance checks all the time from credit card companies that I have accounts with. I don’t think I’ve ever seen an unsolicited loan check that really was valid. Maybe I’m just lucky. Still, I think there’d have to be more to the story. There are various state and Federal laws (such as Truth in Lending) that generally require more documentation and disclosures when a new consumer loan is made. IAAL, but probably not in your state. Even if I am, I’m not your lawyer. You aren’t my client. This is idle speculation and not meant to be reliable legal advice. See a lawyer licensed in your state for that. ---
**Author:** ![Random](https://avatars.discourse-cdn.com/v4/letter/r/57b2e6/32.png) [@Random](https://boards.straightdope.com/u/Random)\ **Post date:** [April 5, 2005, 7:28pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/48 "2005-04-05T19:28:41Z")
**Ruby** and **Gazpacho** beat me to the punch. In re-reading my post, I realized that something I said could be misinterpreted. I didn’t mean to say that cash advance checks from your credit card company aren’t valid. They usually are. What I meant to say is what **Gazpacho** said: that the unsolicited offers for loans from people I’ve never done business with aren’t intended as negotiable checks, even if they really look like a check. (But for true banking geeks, take a look at 3-104(d) of the 1990 UCC. Hmmm…) ---
**Author:** ![Left\_Hand\_of\_Dorkness](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/left_hand_of_dorkness/32/7156_2.png) [@Left\_Hand\_of\_Dorkness](https://boards.straightdope.com/u/Left_Hand_of_Dorkness)\ **Post date:** [April 5, 2005, 7:39pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/49 "2005-04-05T19:39:31Z")
I had a roommate in college get a loan check, and he just deposited it. I’m pretty sure they work like regular checks, with the addition of being legally-binding contracts. However, I’d be very surprised if the contract part is valid without a signature on it, and his mom’s signature can’t bind him. My WAG is that the check may not be deposited without a signature, a requirement that your roommate’s bank missed, and that the issuing company therefore won’t honor the check. Daniel ---
**Author:** ![Mr.Excellent](https://avatars.discourse-cdn.com/v4/letter/m/f19dbf/32.png) [@Mr.Excellent](https://boards.straightdope.com/u/Mr.Excellent)\ **Post date:** [April 5, 2005, 7:58pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/50 "2005-04-05T19:58:21Z")
> [@UncleBeer](#): > > How is his mother cashing/depositing checks made out to him? Through the Remarkable Power of Moms ™, I should imagine. Do you really think your mom couldn’t forge your signature? I know mine can - it comes in handy when the occasional old check comes in while I’m at school. She can just write “Pay to the order of Mr. Excellent’s Mom”, sign it “Mr. Excellent”, and then sign her name. Easily done. ---
**Author:** ![whiterabbit](https://avatars.discourse-cdn.com/v4/letter/w/cab0a1/32.png) [@whiterabbit](https://boards.straightdope.com/u/whiterabbit)\ **Post date:** [April 5, 2005, 9:06pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/51 "2005-04-05T21:06:14Z")
> [@gazpacho](#): > > The load checks I have seen say on them somewhere that they are not negotiable. The mail looks like it contains a check but really contains advertising material for some kind of loan. The ones I’ve gotten are honest-to-Og checks, and if I’d deposited them, they would then own my soul. This is legal, but scummy. And I bet they sent another one, if that’s what this is, because he fell for the first one. Eek. ---
**Author:** ![CurtC](https://avatars.discourse-cdn.com/v4/letter/c/ce73a5/32.png) [@CurtC](https://boards.straightdope.com/u/CurtC)\ **Post date:** [April 5, 2005, 9:17pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/52 "2005-04-05T21:17:23Z")
So maybe he could get off the hook (assuming this is a “loan” check) by getting them to go after his mom on a forgery charge. I have to say, though, that I’m 43 years old, lived in the US the whole time, and have never heard of these loan checks. ---
**Author:** ![ChockFullOfHeadyGoodness](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chockfullofheadygoodness/32/511_2.png) [@ChockFullOfHeadyGoodness](https://boards.straightdope.com/u/ChockFullOfHeadyGoodness)\ **Post date:** [April 5, 2005, 9:19pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/53 "2005-04-05T21:19:53Z")
Long distance carriers send these out all the time. If you read the fine print above the endorsement line, it states that by depositing the check, you agree to switch your long distance service to the new carrier for N period of time. Although these are small amounts ($15-$50), certainly not $4000. ---
**Author:** ![Random](https://avatars.discourse-cdn.com/v4/letter/r/57b2e6/32.png) [@Random](https://boards.straightdope.com/u/Random)\ **Post date:** [April 5, 2005, 9:21pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/54 "2005-04-05T21:21:05Z")
> [@Left Hand of Dorkness](#): > > I had a roommate in college get a loan check, and he just deposited it. I’m pretty sure they work like regular checks, with the addition of being legally-binding contracts. > > However, I’d be very surprised if the contract part is valid without a signature on it, and his mom’s signature can’t bind him. My WAG is that the check may not be deposited without a signature, a requirement that your roommate’s bank missed, and that the issuing company therefore won’t honor the check. I disagree with (or at least don’t understand) most of this. > [@](#): > > I had a roommate in college get a loan check, and he just deposited it. I’m pretty sure they work like regular checks, with the addition of being legally-binding contracts. Where’s the contract part? On the check? On a separate paper? Any Truth in Lending disclosures? > [@](#): > > However, I’d be very surprised if the contract part is valid without a signature on it… Not following this. Signature on the check? Signature on something else? > [@](#): > > …and his mom’s signature can’t bind him. See previous responses about a legal concept called “agency”. Expanding on those, there is a doctrine called apparent agency that might fit this situation. You are wrong when you say that someone else’s signature can never bind a person. > [@](#): > > My WAG is that the check may not be deposited without a signature… No. Not as long as the proceeds make it to the payee’s account. A depository bank can act as if the check has been indorsed. Stated another way, the bank may “supply” the missing indorsement. See UCC (1990) 4-205 and its official comments. > [@](#): > > …and that the issuing company therefore won’t honor the check. Although the circumstances described by the OP are unusual, and I’m not able to research the issue now, the general rule is that the issuer may not properly do so (refuse to honor a check where the depository bank supplies a missing indorsement.) ---
**Author:** ![Left\_Hand\_of\_Dorkness](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/left_hand_of_dorkness/32/7156_2.png) [@Left\_Hand\_of\_Dorkness](https://boards.straightdope.com/u/Left_Hand_of_Dorkness)\ **Post date:** [April 5, 2005, 9:39pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/55 "2005-04-05T21:39:58Z")
> [@Random](#): > > Where’s the contract part? On the check? On a separate paper? Any Truth in Lending disclosures? We get similar checks all the time at our office. They’re for like $2.50, and the small print on the back says that by endorsing and depositing the check, we’re agreeing to sign up to some bogus Internet Yellow Pages scam and be billed for $100 a month or something. > [@](#): > > Not following this. Signature on the check? Signature on something else? Signature on the endorsement line of the check. > [@](#): > > See previous responses about a legal concept called “agency”. Expanding on those, there is a doctrine called apparent agency that might fit this situation. You are wrong when you say that someone else’s signature can never bind a person. Yes, but you can’t, to the best of my knowledge, bind another adult to a contract without their signature unless they’ve granted you power of attorney (or they’re your spouse). I’d need to see some serious cites before I believed my mom could sign a contract on my behalf. > [@](#): > > No. Not as long as the proceeds make it to the payee’s account. A depository bank can act as if the check has been indorsed. Stated another way, the bank may “supply” the missing indorsement. See UCC (1990) 4-205 and its official comments. > > Although the circumstances described by the OP are unusual, and I’m not able to research the issue now, the general rule is that the issuer may not properly do so (refuse to honor a check where the depository bank supplies a missing indorsement.) The problem is not with letting someone put money in my bank: the problem is that these checks are both a check AND a contract. Contracts can’t be signed by a third party and be binding. My WAG part was that the check contained language saying it could not be deposited without the recipient’s signature, in order to make the associated contract binding. The rest of what I said is pretty well supported by my experience with the scam checks we get here, the loan check my roommate got, and contract law. Daniel ---
**Author:** ![Random](https://avatars.discourse-cdn.com/v4/letter/r/57b2e6/32.png) [@Random](https://boards.straightdope.com/u/Random)\ **Post date:** [April 5, 2005, 10:03pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/56 "2005-04-05T22:03:45Z")
> [@Left Hand of Dorkness](#): > > Yes, but you can’t, to the best of my knowledge, bind another adult to a contract without their signature unless they’ve granted you power of attorney (or they’re your spouse). I’d need to see some serious cites before I believed my mom could sign a contract on my behalf. > > Daniel Not true. I’ll explain further, but to effectively do so, I need to know if you are familiar with the legal concept of agency. Note: I am not asserting that one’s mother is automatically one’s agent. I am saying that she could be, depending on the facts, even without anything formal like a power of attorney. For example, if she regularly opens his mail and does his banking for him, and he acquiesces, she likely is his agent, at least for some purposes. An agent can bind a principal to a contract. ---
**Author:** ![davidm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidm/32/225_2.png) [@davidm](https://boards.straightdope.com/u/davidm)\ **Post date:** [April 5, 2005, 10:22pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/57 "2005-04-05T22:22:52Z")
> [@Number](#): > > [Wayback Machine](http://web.archive.org/web/20041009145407/http://users.rcn.com/pcombs/%24%24tablecontents.html) has it, minus most of the pictures. Try [here.](http://www.goodthink.com/writing/view_stories.cfm?id=11&page_id=2) ---
**Author:** ![galt](https://avatars.discourse-cdn.com/v4/letter/g/35a633/32.png) [@galt](https://boards.straightdope.com/u/galt)\ **Post date:** [April 5, 2005, 10:41pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/58 "2005-04-05T22:41:52Z")
So **Random** , let’s assume a situation where the 3rd party (mom in this case) is **not** the agent of the person the check is made out to. Here are some pertinent questions: 1. Is it possible for person B to deposit a check made out to person A into person A’s account without the knowledge, cooperation, or endorsement of person A, and without having the check endorsed in any way (i.e. nobody endorses it)? 2. Is it possible for person B to deposit a check made out to person A into person A’s account without the knowledge, cooperation, or endorsement of person A, by signing their own name (B) to the back of the check? 3. In situation 1, if this worked, the bank would be “supplying” the missing endorsement, but I would hope that this “supplied” endorsement could not be used in any way to bind A to a contract. Right? 4. If situation 2 is possible and happens, would person B then be the one responsible for any loan agreement, even though person A received the loan disbursement? I would think so. I guess the follow-up question would be how person B is identified from just a signature in that case. It seems as though the ability to arbitrarily deposit a check “for” someone else without their knowledge would lead to an inherent loophole in these “endorsing this check binds you to a contract” things. If that were the case, I could dig through my next door neighbor’s trash, find his $60,000 loan check, follow him to the bank, and then deposit it for him without his knowledge. He hasn’t knowingly taken any money which he should assume has strings, and he certainly hasn’t entered into any agreement with the writer of the check, nor authorized me to enter him in any such agreement. ---
**Author:** ![Random](https://avatars.discourse-cdn.com/v4/letter/r/57b2e6/32.png) [@Random](https://boards.straightdope.com/u/Random)\ **Post date:** [April 5, 2005, 10:57pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/59 "2005-04-05T22:57:50Z")
No time now for a real response. I’ll try to log on later tonight. ---
**Author:** ![Sample\_the\_Dog](https://avatars.discourse-cdn.com/v4/letter/s/8797f3/32.png) [@Sample\_the\_Dog](https://boards.straightdope.com/u/Sample_the_Dog)\ **Post date:** [April 5, 2005, 11:48pm UTC](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811/60 "2005-04-05T23:48:27Z")
Very interesting about the loan checks. I’ve never received any, and I intentionally seek out scams (don’t ask). Perhaps GA law prohibits them, b/c if it’s legal here I’d probably get a lure from time to time. I do get the checks from companies I do business with, which if cashed will sign you up for services you have to pay for (it’s written in mouse-print on the back, above or below the endorsement [signature] line, for non-US Dopers). But never from some random organization I don’t know about. I doubt that this money is parental cash that the roomie wants to pretend isn’t coming from the folks, as some have suggested. If that were the case, why even mention it to the roomie, much less invent a story about it? It may be loan money, but I always knew where my loans were coming from. If he were expecting a loan, wouldn’t he be complaining that it hadn’t arrived? I’ll keep tuning in to the soap opera! [Previous page](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811.md?page=2) [Next page](https://boards.straightdope.com/t/so-my-roommate-is-getting-free-money-what-the-heck/297811.md?page=4)