Forged signature on lost cheques

The client was shocked to discover that a cheque for $4,900 has been cleared through his account the previous month – and he didn't write it. He informed the bank immediately, which produced the original cheque. It was obvious that the signature was a forgery, and the client asked for the money back.

However, the bank refused, saying the client was to blame. He couldn't remember receiving the cheques for the account, or where they were stored, and the bank cited the account agreement which required the account holder to be responsible for safeguarding the cheques.

In our investigation, there was no dispute about the forgery – the signature wasn't even close. And the bank admitted that it did not verify the signature before cashing the cheque, and then allowed it to clear. Nonetheless, the client's responsibility was also clear – he should have ensured the blank cheques were secure.

In our interview with the client, he confirmed that he did not remember receiving the blank cheques. He then suggested several places where they might have been stored in his home, but he couldn't be sure. We also considered that on the specific cheque used in the transaction, the forger had to add the name and address manually, which was correctly done.

We recommended the bank compensate the client for half the amount, recognizing the joint responsibility for this unfortunate incident.

(2005)