Check Endorsement Requirements

Question: We have an elderly depositor who endorses his checks in huge handwriting all the way down the length of the check, completely disregarding the portion at the top of the check where it says he must sign. He says he can't write smaller. He gets his social security in the form of a check, and we can't convince him to have it direct deposited. We know he shouldn't be writing all over the back of the check. Have you any suggestions?

Answer: My first would be not to worry too much about the fact that he isn't confining his endorsement to the area designated. This also is covered by Regulation CC. When Reg CC was first introduced for comment, the regulators said payee endorsements on the back of the check were forbidden anywhere except for the 1.5 inches from the trailing edge of the check. (If you look at the back of a check, the left end is the trailing edge.) Retail stores went bonkers - said they had to put their identifying stamps on to record information about the presenter of the check. So Fed backed off that requirement. They changed their wording to, "The area from the trailing edge of the check to 1.5 inches from the trailing edge is commonly used for the payee indorsement", removing the absolute requirement for the endorsement in that area. By that time, though, many training people had already incorporated that requirement into their teaching. I still run into financial institutions that will not allow endorsements anywhere else, even though the rule was changed in 1988.

Fed, after they backed off the endorsement requirement for customers, however, went on to say that the depositary bank's nine digit number must go between 1.5 inches from the trailing edge to 3.0 inches from the leading edge. It also states in Section 229.38(d) that if your nine digit number is "...unreadable because of material on the back of the check. The depositary bank is responsible for a loss resulting from a delay in return..."

If your customer is presenting his social security checks to you in person, I'd not be too concerned of his method of endorsement on those checks. However, on any other checks he wanted to negotiate, you'd want to be sure his writing did not interfere with the ability to read your bank's endorsement.

Copyright © 2003 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 12, No. 12, 3/03