Issue: High Security Checks May Protect You From Some Holder in Due Course Claims. Greg Litster is president of SAFEChecks, and a former 18-year banker. Both are strictly controlled, high security check stock that were designed with Frank Abagnale, one of the world’s foremost authorities on fraud prevention. 1997). He requested that payment be stopped and a new check issued. Superior Court of New Jersey, Appellate Division, A-163-00T5. Based upon a New Jersey Appellate Court decision over a stopped payment check that was over two years old, 90 or 180 days is too long. Then, several months later, still in possession of the paper check, they take it to a branch or an ATM and cash it again. Holder in Due Course (HIDC) is part of the Uniform Commercial Code (UCC) that significantly impacts an organization’s liability for check fraud and the checks it issues. Post was not sent - check your email addresses! Hauser Contracting appealed the decision, arguing that summary judgment was improperly granted because the Court failed to properly address Hauser Co.’s defense that the checks were invalid negotiable instruments and therefore erred in finding the plaintiff a Holder in Due Course. Mr. Triffin bought the checks, claimed Holder in Due Course status and sued Pomerantz. While this practice would be very inconvenient for the recipient, there is no other way a company can protect itself from a Holder in Due Course claim. The check cashing store accepts and negotiates the check. Although Triffin lost on summary judgment at the trial court, the Appellate Court reversed the summary judgment and instructed the lower court to enter judgment in favor of Robert Triffin, with interest. So today while going through a portfolio of mine I discovered a year old check from a job I use to work at up until several months ago. On April 20 and 21, 2002, a check cashing store cashed 18 counterfeit checks, in amounts ranging between $380 and $398, purportedly issued by Pomerantz Staffing Services. Unfortunately, the drawer issuing the check can be held liable for both checks. The complete cases can be downloaded and viewed at www.FraudTips.Net/holder.htm. The authors assume no responsibility or liability for the specific applicability of the information provided. The answer is No. All involve Robert J. Triffin, a Pennsylvania resident who is in the business of purchasing dishonored instruments (checks), acquiring Holder in Due Course status and suing the maker for recoupment. In the appeal, Pomerantz claimed that it did not sign the checks, which also did not come from its check stock. The trial judge granted Pomerantz’s motion and dismissed the case. Check #12345 hits Good Company’s bank account, and is returned "payment stopped" to the check cashing store. When the check casher deposits the original paper check, and its image is presented to the drawer’s bank for payment, the second presentment breaches the Warranty that John made when the first electronic image was deposited via John’s smart phone. He can be contacted at GLITSTER@aol.com and greg@safechecks.com, or by phone at (800) 949-2265. However, the Appellate Court agreed with the lower court. The Bank subsequently received over 80 similar checks drawn on Hauser Co.’s account, valued at $25,000. 199, 687 A.2d 1045 (App. It will behoove all mobile phone users and financial institutions alike to be alert and vigilant toward fraud prevention. For example, the recipient of the check may change the amount from $10 to $100. We can cash checks and money orders in any amount up to and including $5000. However, Sun either did not know about the law or chose not to pursue it, because it merely tacked the check up on its bulletin board. Credit Debt Bankruptcy. A Holder in Due Course can sell his or her rights to the check to anyone, at any time, and at any price. However, in many cases the payee (the person who wrote the check) is held liable for causing the problem. Companies should use checks uniquely designed and manufactured for them, or buy from vendors such as SAFEChecks (safechecks.com) that customizes every company’s check and never sells check stock entirely blank without it first being customized for the end user. After that time, the stop payment drops off the bank’s system and is no longer monitored. This makes sense. Check-writers beware: your checks can be cashed more than once ... Twice in the past year, she wrote checks to pay for small services such as yard work. These protections generally do not apply if you signed a blank check. The issuing person or company reissues a new check payable to John Doe or Jane Doe. This case clearly illustrates the value of check security features, a properly worded warning band, and a controlled check stock. Mr. Hauser reviewed the checks and ascertained that, while the checks looked like his checks, they were counterfeits because none of the payees worked for him and he did not authorize anyone to sign those checks on his behalf. “Void After XX Days,”), the recipient/purported “Holder” has no legal standing as a Holder In Due Course, and cannot claim that legal status. In this case, Mr. Triffin appealed a trial court’s summary judgment decision dismissing his complaint for payment of a Cigna Insurance Company check that was transferred to Triffin by a Holder in Due Course after Cigna had stopped payment on the check. – What to Watch For Robert J. Triffin obtained the check from Sun’s Market, became the new HIDC, and filed this lawsuit against Cigna in August 1995, over two years after the check was returned unpaid. However, if a signature is forged, the corporate account may be liable if one of the following exceptions applies: In the purchase, Sun assigned its Holder in Due Course rights to the check to Triffin, who filed suit against Cigna on August 28, 1995, over two years after the check was returned unpaid. The original live check, however, still exists too. Knowingly cashing or depositing a check twice on purpose is check fraud and can lead to federal indictments. Scammers often convince victims to deposit fake checks and forward a portion of the cash to them. While the above case clearly illustrates what a Holder in Due Course is, the case does not deal with check security features, or the lack thereof. Cashing or depositing a check twice is known as a double presentment, and it can happen unintentionally in a couple of different ways: 1. Forgers buy the check stock, and using a $99 scanner and Adobe Illustrator, create counterfeit checks that cannot be distinguished from the account holder’s original checks. Staffing agency clients are increasingly pointing to a fraud committed by disloyal short-term employees. There is no need to provide any more explanation than that. Verbiage could read: "THIS CHECK EXPIRES AND IS VOID 25 DAYS FROM ISSUE DATE." If the double dipping occurred through an electronic “substitute check,”, they can point to the Check 21 Act, specifically 12 USC §5004, and argue that the double-dipper’s bank is properly accountable. So this would be double presentment. Here Are the New Rules for Reporting Independent Contractor Payments, Joint Employment Test Gets Muddied Again: Federal Court Rejects New DOL Test. Recommendation: Make a check “expire” before replacing it, or you can be held liable for both checks. The checks were returned unpaid by the bank and marked as “Stolen Check - Do Not Present Again.” In February and March 1999, Robert Triffin purchased 18 of these dishonored checks totaling $8,826.42 from four check cashing agencies. The Court said the counterfeit check met the definition of a negotiable instrument, and because the check and signature were identical to an authentic check, the check cashing agency could not have known it was not authentic. Hauser then contended that the checks were not negotiable instruments because Mr. Hauser did not sign the checks, did not authorize their signing, and its payroll service, ADP, did not produce the checks. This occurred in PA. Because they were provided a means to verify authenticity and failed to do so, they were not an HIDC and had no rights to transfer to Mr. Triffin. Each agency stated that it cashed the checks for value, in good faith, without knowledge that any of the signatures were unauthorized or forged. Mills received the check, but falsely claimed to the issuer that he had not due to a change in his address. John Doe quickly cashes the second check, and waits overnight for the first check to clear before withdrawing the money from the first check. Staffing agencies, payroll agencies, or PEOs who issue a twice-cashed check are sometimes asked to make good on the same payment twice. Check #12345 hits Good Company’s bank account, and is returned "payment stopped" to the check cashing store. Pre-Printed Check Cashing Fees* Cashing your check at your local Walmart is affordable, with fees based on the amount of the check: For checks up to and including $1000: $4.00* For checks over $1000 up to and including $5000: $8.00* Two-Party Personal Check Cashing Fees** All rights reserved. Cut Off This, But Not That! Cigna placed a stop payment on the initial check and issued a new check. At the time, Hauser Co. employed Automatic Data Processing, Inc. (ADP) to provide payroll services, and a facsimile signature was utilized on all Hauser Co. payroll checks. He is an associate of Frank Abagnale, and is publisher and editor of Mr. Abagnale’s publication, The Fraud Bulletin. One check was refunded by the bank, the other by the student. By the time the check is discovered to be fraudulent, the … Three Federal Appellate Court cases illustrate the far-reaching power of Holder in Due Course. When Defending a Misclassification Claim, Don’t Forget a Limitations Defense, Discomfit a Bear? Baker Hostetler LLP This is because the second check was cashed at the bank, and the first check was deposited remotely. They cashed it once, presumably by mobile deposit. Recommendation: Use a controlled check stock, which means using checks that are uniquely designed or customized for your organization and are not available blank to others. 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