When Bankers Chat about Rubber Stamps

I don't know about you, but I find no overheard conversation more scintillating than when bankers discuss the use of rubber stamps to sign checks (well, perhaps I exaggerate a tad).

If you sign a lot of checks (or other documents) then it certainly makes sense from a practical perspective to have a rubber stamp do the work for you, and we hope you'll get yours from Pixeltrip (just scan your signature into a nice little hi-res image file, then upload it into our online design machine. Groovy, you say? Who's arguing?).

But you probably wonder in the back of your mind whether it's OK to sign checks this way. So that's why I've eavesdropped, in a manner of speaking, on a couple of bankers. But first, my conclusion: if someone has stolen or forged blank checks from your company and has plans to forge your signature to put on them, you're in trouble already, however you normally sign your checks. The real issue at that point is your bank's policies for fraud resolution and your relationship with your bank as far as how likely they are to recognize when something is out of the ordinary.

Also this: treat your signature stamp as if it were a key to your front door, or to your car. Keep it in a locked drawer. If someone wants to steal from you they'll find a way of doing it but will hopefully get caught. But make it clear that your signature is yours to use (or delegate the use of) and any use without your permission is like taking money out of your wallet or, again more to the point, is exactly equivalent to forging your signature. It's a crime.

Now the bankers (don't let them know you're listening):

Question: We don't have a written policy for customers regarding the use of rubber stamps for signing business checks. The bank I used to work for years ago required a "hold harmless" letter from the customer before allowing the use of a rubber stamp. When we mentioned this to our customer, he objected and threatened to go to another bank. My concern is what kind of liability we would subject our bank to, should we allow this. I looked at the UCC [Uniform Commercial Code] and understand that it is permitted. I'm wondering if you know how other banks handle such requests.

Answer: If a customer chooses to use a facsimile or rubber stamp signature, a financial institution is not ordinarily relieved of liability if the stamp is used without the customer's authorization UNLESS :
1) the customer has given you an agreement to hold you harmless from any loss resulting from the improper or unauthorized use of the stamp or device, or
2) you can prove that the customer was negligent.

[...]

...if the forgery happens because the customer is careless about where he keeps the rubber stamp, and if it and the checks are not kept in a safe place, but are instead available for fraudulent use, then the customer bears the loss - not the bank. In all fairness, your customer should be aware of these facts also.

Anyone with a large bank account should have had a discussion with their bank about how fraud will be dealt with if it ever occurs. Ask them how they feel about rubber stamps (then ask them how accurately their tellers are able to verify handwritten signatures. I suppose they will tell you that this is no problem, though you will both be wearing nervous smiles).

Dislaimer: Well, this should be obvious, but I'm neither a banker nor a lawyer and, yes, I sell rubber stamps. But Google this issue on your own and eavesdrop on a few bankers. Food for thought, anyway.

UPDATE: Ok, I know this is painful stuff you probably don't really want to think about and I'm not sure why I think any of this is going to increase sales here, but I found the following queasy-making paragraph on how banks check signatures on checks (from a web page about bank fraud):

Checking Signatures on Checks

Banks are responsible for checking the signatures on all checks written on accounts at their bank. However, banks consciously make an economic decision to not check the signatures on checks and rely instead on alternative means to provide some degree of security. For example, a bank may have a policy of examining only the signatures on checks over a certain dollar amount. Of course, this leaves them exposed on a wide open basis to fraud involving checks under their cutoff level for checking signatures. In addition to this cutoff level, banks often have a policy to randomly check the signatures on a percentage of checks under their cutoff level. This at least provides them a chance of detecting fraud under their cutoff level; and without these random checks, the bank is completely exposed to fraud on checks under the cutoff level.

Posted by Jeremy at 04:02 PM | Comments (0)

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