Stolen & cashed bank check - any recourse?

Factual Questions
1

I know we have some banking experts on this board; maybe one of you can help me…

A customer of mine mailed a rather large (over $1,000) bank check to me as payment via first class mail. The check was apparently stolen from the mail, and cashed at another branch of my customer’s bank (his branch is in MA, the check was cashed in NJ, I am in NY. There are no branches of his bank near me). The customer has been told by his branch manager that he is out of luck (he’s already sent me another payment, so it’s not like he’s lying to try to weasel out of the deal). The bank has no record of any ID being shown in order to cash the check. Is there anything this customer can do?

2

IANAL or anything, but it does seem that you, in writing a cheque, give very specific instructions to pay ``to the order of’’ somebody. If they go and take money out of your account in a way that is not in accordance with your specific instructions, how is that not stealing on their part?

Assuming your client didn’t do something idiotic like leave the pay to the order of line blank…

3

I asked something like this recently, in the context of whether I could (hypothetically) file a claim with the FDIC. I was told that I would probably have to sue the bank to recover the funds, if the bank refuses to make good on its error on its own.

4

I would reccomend your customer get in contact with a postal inspector, since it seems clear that the transgression happened while the letter was in the system. It would seem to me that the person who paid out the check would be the one left holding the bag, especially since no information was taken down when it was cashed.

5

NurseC: Unfortunately, since the letter was sent first class, there is no tracing information. So we have no proof that the check was mailed.

Viking: The check was made out to me. No issue there.

6

From here. The bank doesn’t want to fess up to your customer that they are responsible. Although, the laws may be specific to the state.

7

The bank should pay. He should go back to bank and demand to speak to the manager again. If he does not get a favorable response from the manger, he should contact the corporate office.

8

Does the signature look like yours?

9

Here’s the way it would work in Georgia:

  1. As soon as practicable after realizing the check has been stolen and cashed, the account owner must notify the bank.

  2. The account holder MUST complete an Affidavit of Forgery, swearing that: A) the check was stolen, B) the signature and/or endorsement was forged, C) the account holder did not gain any benefit from the transaction, and D) the account holder will press charges if the guilty party is found. Some banks may require a police report as well.

  3. After verifying the claim, the account holder’s bank would refund the money.

  4. The bank then must try to recoup from the forger. Like that’s gonna happen.

Signature verification and verifying the identity of the person cashing the check are fiduciary responsibilities of the bank. Since the bank of account and payee bank are the same in this case it should be a no-brainer. If your state law really allows banks to shirk this responsibility I would be surprised.

10

It is my understanding that it is the bank’s responsibility to confirm that they are paying funds to the person specified on the check. If they fail to do so, then they are liable for the damages. I would have your customer contact his bank and raise hell until they refund his money.

11

Would the fact that this was a cashier’s check (I said “bank check” in the OP, which AFAIK is the same thing, but may have been unclear) make a difference? His branch manager is saying that it does.

NurseC: the link you pointed to refers to blank personal/company checks that are stolen and then made out to other parties. Not really the same situation.

Thanks for all the responses so far, everyone.

12

A cashier’s check would change things although I don’t know if it would improve or diminish the ability to get a refund.

A cashier’s check is written against the bank itself rather than the bank’s customer, so I suppose the fraud would run against the bank not the customer. (The customer paid for the check at the time the bank issued it.)

13

Yes, a cashier’s check makes a difference because few banks issue their “own” cashier’s checks anymore. While the check may have your bank’s name on it, it is usually drawn on another bank. Citicorp is the huge player in the cashier’s check business. Your bank takes your money (plus fee), issues a cashier’s check, then sends the money (plus smaller fee) to the issuing bank. It only makes a difference in this case because you’ve most likely added another party to the mix.

Payment on a cashier’s check can be stopped and re-issued only in the case of lost, stolen, or mutilated check. A surety bond, paid by the customer, is usually required. Since the check in question has already cleared a bond would do no good. The crux of the issue for your client remains the fact that the bank paid the check without properly ID’ing the payee. You may have to go over the head of the branch manager to get results. Branch managers are generally sales people these days, not bank operations experts. It’s not uncommon for them to be ignorant of banking regulations, especially in a situation like this that they may see once or twice in a career.