National Check Fraud Center

Laws Relating
to
Forged, Altered, and Other Problem Checks

The starting point for determining rights, responsibilities and liabilities relating to forged, altered and other problem checks is the Uniform Commercial Code ("UCC"), Article 3, Negotiable Instruments, and Article 4, Bank Deposits and Collections. In these statutes you'll find important definitions, information relating to the customer's duty to examine his statement to discover and report alterations and forgeries, and much more.

The UCC has been adopted in all 50 states, although there are some variations in some of the provisions in a few states. A revised version of Articles 3 and 4 has been adopted by substantially all of the states during the 1990s. Check with your local counsel to determine what provisions in your state may differ from the uniform version.

Article 4A of the UCC deals with Funds Transfers and details how a bank can minimize its liability by having a commercially reasonable security procedure which has been agreed upon by the customer.


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