COUNSELOR’S CORNER Commercial and Consumer Fraud: Who’s Liable? Nick Buda and Bob Kardell Baird Holm, LLP Banks are no strangers to fraud, including check, wire and email fraud. Yet, identifying the latest fraudulent scheme and, more importantly, who is liable for the resulting loss can be confusing. This article identifies a few examples of commercial and consumer fraud, what a bank can do to help protect itself against losses and who is responsible for the loss. Part I — Commercial Fraud A Bank’s Options for Minimizing Liability for Check Fraud Commercial check fraud is still a widespread issue that banks routinely encounter. Articles 3 and 4 of the Nebraska Uniform Commercial Code (UCC) govern the procedure for allocating the loss resulting from a counterfeit, forged or altered check among the parties involved in the check processing system. As a general rule, a bank may only charge its customer’s account when the bank is presented with an item that is properly payable from its customer’s account.1 But what happens if a fictitious check or transaction has been presented for payment? 18 Nebraska Banker
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