Deadline for Returning Counterfeit Checks

The midnight deadline applies to the return of counterfeit checks. There are limited circumstances -- such as when there is a clearinghouse agreement that modifies the results of the Uniform Commercial Code -- the loss for a counterfeit item can be shifted to the depositary bank even it the item isn't detected by the paying bank until after its midnight deadline. The midnight deadline means that the check must be returned by midnight of the business day following the business day on which the check is presented to the paying bank for payment.

First published on BankersOnline.com 5/26/08