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Home >> Scams/Fraud
Who Initiates Fraud Investigation?
I am a payroll supervisor for a resale clothing company. We issued a payroll check to an employee who held onto it for a couple weeks and then said he lost it. When we went to issue a stop pay and cut him another check, we saw that the initial check was deposited and endorsed with the payee's name, but obviously with a different signature. We have been told that because the company was the maker of the check, that we are responsible for filing a fraud claim. Why is this a company responsibility if the check was lost by the employee?
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 Actually, the employee gets things rolling by coming to you and complaining that he lost his check. Now that you have learned the check was cashed by parties unknown, you still have an obligation to pay your employee. That's one side of the equation.
The other side is how you might get your money back for the apparently fraudulently endorsed check. That effort starts with an affidavit from your employee stating that the check was lost, he didn't endorse it, and he didn't obtain any benefit from it. The affidavit should be part of his claim for a replacement check. You use the affidavit to make a claim on your bank that it had no authority to pay a check that was fraudulently endorsed. The fact that your bank couldn't know, doesn't matter. Your bank uses the affidavit to make a claim against the depositary bank that it had no right to obtain payment for the check because it was fraudulently endorsed.
All of this back-pedaling of the route the check took to get to your bank is done in order to put the responsibility for the fraud where it belongs, namely, with the party that dealt with the forger. It's that bank that will need to take action against the party that cashed or deposited the check, and that bank (not you) that gets the privilege of contacting law enforcement if it can't recover its funds, all of which really makes direct deposit of payroll seem rather inviting, doesn't it?
Published on BankingQuestions.com 8/25/09
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