What Constitutes A Proper Endorsement?

An indorsement is the signature of the indorsing party (which may be in whatever form, including a rubber stamp spelling out a business's name, that the indorsing party has adopted as its signature). It may or may not be accompanied by restrictive wording (for deposit only) or special wording (pay to Sally Jones). It does not have to include the name of the depositary bank or an account number to be a valid indorsement.

That said, a missing indorsement is not something to get all worked up over. Check out UCC 4-205 (Depositary Bank Holder of Unindorsed Item), where you will see that a bank gets holder or holder-in-due-course status even on an unindorsed check if it's given to the bank by the payee/depositor. The depositary bank in that case warrants to you as the paying bank AND to your customer, the drawer of the check, that the depositary bank's customer received cash or credit for the item. In essence, you're in the same position you'd be in if the item were indorsed.

I don't recommend abandoning the review of indorsements on items over some dollar amount. Three thousand dollars seems like a reasonable threshold, but it could be lower or higher than that depending on your needs. What you DON'T need to do is send back every check that's not indorsed. Instead, focus on checks that have incomplete or anomalous indorsements. For example, send back the multiple payee check (with AND) that's indorsed only by one of the payees, or the check that's payable to ABC Entertainment and indorsed XYZ Grocery. You know those checks will be problems later if you don't return them before your midnight deadline, so you might as well get them out the door now, when you haven't ticked off your customer for paying them in the first place and won't need an affidavit or without-entry warranty claim to "beg" for your funds back.