Forgery claims and unreadable signatures

Question: Our customer brought in a paid check from his monthly statement that he said is forged. This customer's signature is nothing more than a short scribble and no two signature specimens are nearly the same in appearance. Each specimen signature has wildly varying peaks, valleys, and swirls - some with loops and others without loops. Some specimens start in a left direction and others in a right direction.

We asked the customer to sign a forgery affidavit, which he did after expressing some reluctance because he couldn't be absolutely sure it was not his signature due to his unusual style. He finally decided to sign the affidavit, reasoning that he did not remember writing the check to the unknown payee. Also, he could not locate the duplicate (carbon) copy of the check and he claims the check and the carbon had both been removed from the pad of checks. Is there any basis for rejecting this forgery claim?

Answer: I'd say there was considerable basis! First you'd want to ask him many questions about where he kept his check book, who had access to it, and also investigate the payee's location/business/relationship, etc. And certainly the signature itself may be a form of negligence.

Secondly, you need to get another signed document from him - one that says you will no longer be liable for any forged signature claim on his signature. Some banks put into their terms and agreement that the financial institution is not liable if it fails to detect a forgery when the forgery is such that a reasonable person is not able to detect it. If you decide to keep his account, you might want to include that clause in your agreement.

I am reminded of a would-be depositor at my bank who came in and wanted to give us five signatures cards because "...my style of signature depends on how I feel that day." We refused to open an account for him. He sued. We won. The judge said his request was unreasonable.

Copyright © 2003 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 13, No. 7, 10/03