Checking Endorsements: Is it required?

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Question:

To reassure my superiors, please clarify the information on your article in Bankers' Hotline<a href="http://www.bankersonline.com/articles/bhv11n07/bhv11n07a18.html">Volume XI, Number 7 </a>in the Q&A section. You are stating that the liability for forged endorsements falls on the depository bank. We have been physically reviewing endorsements on checks over $750.00. This policy has been in effect for some time. Would it be OK for us to change our "written" policy to not include reviewing the incoming checks?

Answer:

There is no good reason to examine endorsements on incoming items except in the few instances where you may have agreements with your customers to do so (and hopefully are charging them for the service). This might be in the case of an insurance company that has multiple payees, and requires the endorsements of each of them. Or medical insurance checks. Other than those, you could better use the time spent checking endorsements on other chores. They are not your problem. They're the problem of the bank that accepted the endorsement in the first place.

First published on BankersOnline.com 12/3/01