We have a customer who is claiming that he did not authorize a wire transfer. According to our records we have his authorization and call back procedures were followed. What are we required to do next?

Wait for the lawsuit.

DWUK, while you're waiting you may want to read your state's UCC 4A Section 202.

Thanks for the advice. We are waiting for him to make the next move. I wasn't sure if we had to recredit him or not. As I said we do believe he is trying to scam us.

The call back conversation was taped - right???

Peter is right - you might want to examine:

If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified pursuant to a security procedure, a payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if (i) the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and (ii) the bank proves that it accepted the payment order in good faith and in compliance with the security procedure and any written agreement or instruction of the customer restricting acceptance of payment orders issued in the name of the customer. The bank is not required to follow an instruction that violates a written agreement with the customer or notice of which is not received at a time and in a manner affording the bank a reasonable opportunity to act on it before the payment order is accepted.

Commercial reasonableness of a security procedure is a question of law to be determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type, and frequency of payment orders normally issued by the customer to the bank, alternative security procedures offered to the customer, and security procedures in general use by customers and receiving banks similarly situated. A security procedure is deemed to be commercially reasonable if (i) the security procedure was chosen by the customer after the bank offered, and the customer refused, a security procedure that was commercially reasonable for that customer, and (ii) the customer expressly agreed in writing to be bound by any payment order, whether or not authorized, issued in its name and accepted by the bank in compliance with the security procedure chosen by the customer.

A call to your attorney as a preemptive measure might not be a bad idea either to see how strong a defense you have.

I don't believe the call back was taped we are only a small 2 office bank. I have printed a copy of UCC 4A Section 202. The banks attorney has been contacted, so I guees we just wait now. Thanks for the advice.