What are my rights and responsibilities when a check has been forged on my account?
Ultimately, the forging party is liable for items forged by them. However, banks do have a responsibility under Section 4.401 of the Business and Commerce Code to pay only authorized items from a customer’s account, and a forged check is not an authorized item. Most banks employ automated check processing techniques which do not verify the signature on each check to the signature on the deposit account. Under Section 4.406, the customer has a duty to discover and report unauthorized signatures or alterations with reasonable promptness. Typically, the depository contract will limit the discovery period to 30-60 days. Once reported, the bank generally must credit the item back to the account unless it can prove that the customer failed to comply with his or her discovery and reporting duties as imposed by the law. However, once a customer has notified a bank of a forgery incident, and has had at least 30 days to examine previous statements, he or she may not recover a loss on items previ
