Check Security Online Special

To prevent a criminal from replicating a check, there is only one solution: Choose a secure, or hard-to-locate check stock. Some stocks are tightly controlled and will only be sold pre-printed.

Liability and Prosecution

Article 3406 defines certain liability issues occuring as of 1996. This law is uniform throughout all 50 states and dictates, as Abagnale paraphrased, “Whoever was in the best position to prevent the forgery is who assumes the liability.” In the case of a check stolen from unsecured outgoing mail, that would be the fault of the person who left the check there (i.e., the company assumes liability).

If a bank or check cashing store cashes a counterfeit check that has obvious faulty security, then the bank is at fault, but if the original check had easily replicated security features and the check is a convincing fake then liability is unclear. Now “holder in due course” comes into play. Abagnale explained that the original purpose of holder in due course was to prevent the check holder from unfair liability, but it has been used to extort payments from honest businesses. Abagnale said he often must inform companies facing “holder in due course” litigation they may actually be forced to pay the fraudulent check. “That’s a horrible law and people cannot believe—they just sit there dumbfounded—that they have to pay for this,” he said. If a plaintiff can convince a judge there was no way to detect the fraudulent check and it should be considered as a negotiable document, then the defrauded company will have to pay. The judge may side with the business, but who would want to leave such a decision in the hands of the courts when it could be avoided?

The same “holder in due course” legislation may apply in cases of check replication because a company used a common check stock. This is best avoided.