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My bookkeeper handled all of my business's deposits and balanced the monthly statements. He stole some checks payable to the business and forged the endorsement, which the bank honored. What can I do?

Alert your bank to the fraudulent transactions. Even when a bank pays a check with a

forged endorsement, it is the account holder's responsibility to review the account statements and notify the bank of fraudulent transactions.

There is very little the bank can do to protect you from the actions of your employees. It is your responsibility to have separation of duties—for example, the same person should never make the deposits and balance the monthly statements.

Banks are generally required to reimburse customers for forged checks. However, based on individual circumstances, a bank can investigate to determine if the customer is entitled to a reimbursement.

Generally, a bank is liable for accepting a check that has been forged, altered, or improperly endorsed. However, the bank may not be liable if

  • it accepted the check in good faith, and
  • the customer’s failure to exercise ordinary care substantially contributed to an alteration or forgery.

If your actions—the way the check or checkbook was handled, issued, completed, or made payable—contributed to the making of the forgery, you may be at least partially liable. However, even if you were negligent, the bank may still be required to reimburse you if you can show that the bank failed to exercise ordinary care in handling the check.

If you have an account with multiple forgeries (for example, stolen checks), you should consider closing the account. You should also check your deposit account agreement for the bank’s policies regarding forgery and timeliness in reporting errors on your statement.

Last Reviewed: October 2020

Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on HelpWithMyBank.gov should not be construed as legal advice or a legal opinion of the OCC.

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