extent to which the failure of each to exercise ordinary care contributed to the loss. UCC § 3-406(b). Simply, if the financial institution of the first deposit did not exercise ordinary care in taking the check for deposit, it will be precluded from asserting liability for the forgery against the payor’s financial institution. So, what does your financial institution need to do to show that it acted in good faith and exercised ordinary care when accepting the check for deposit? The following checklist details some actions your institution should take: • Follow all procedures for Customer Identification Program (CIP) and beneficial ownership, including obtaining valid government-issued identification. • Closely examine the identification provided to determine if it is genuine (institutions typically utilize an I.D. Checking Guide that contains images of valid driver’s license formats for all 50 states.) • Compare the check issuance date with the entity formation date. A check issuance date before the entity formation date could be an indicator of fraud. • Compare the address of the payee on the check (if there is one) with the address for the entity. Different addresses could be an indicator of fraud. • Look at the address of the payee and the entity in comparison to your institution’s branch locations. An address that is not close to any branch location could be an indicator of fraud. If your institution needs assistance with handling a fraudulent endorsement dispute, or other breach of transfer warrant dispute, Spencer Fane has attorneys available to help. 800.228.2581 MHM.INC Now more than ever people want self-service options. With our core integrated ITMs we can make this a reality both in the lobby and in the drive-up of your branch. SELF-SERVICE BANKING NEBRASKA INDEPENDENT BANKER 11
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