If a business' account has been charged with a bogus transaction, as stated above, the bank should be notified immediately and a police report should be filed, which will require an affidavit that provides the details of the fraud and possible suspects. The bank and others involved in the transaction, such as those cashing the check, may also require a copy of the affidavit.
Retail establishments that cash bad checks for their customers obviously need to make an effort to collect their losses, whether using automated electronic resubmission to a bank, a collection agency or legal process. If the business that was a victim of check fraud finds themselves faced with calls and notices from a collection agency or legal representative, having a copy of the police report can help explain the situation more convincingly to the agency.
However, some agencies use more aggressive techniques that are aimed at annoyance or intimidation to get people to pay. If you or your client has been an honest victim of a check fraud scam, then don't let the collection agencies get to you.
Responsibilities of the bank and bank customers are spelled out under Article 4, part 4-406 of the Uniform Commercial Code, which requires not only banks, but bank customers to be diligent in catching bad checks that may be charged against an account. Regardless of the cause, customers are required to provide timely notification to the bank using the resources provided to them, or they can be liable.
These are ideas and responsibilities to protect against check fraud and protecting funds. Remember that the bank and bank customer are financial partners, and cooperation between each is essential in stopping fraudulent transactions and apprehending perpetrators.
Charles W. Gebhardt is a CPA in practice in Hillsboro, Oregon. His firm specializes in treasury management services, corporate startups, part-time CFO services, QuickBooks advising, estate and taxation. He can be reached at firstname.lastname@example.org. www.gebhardtcpa.com