What are my rights when a check written to me was fraudulently endorsed by another party and paid?
Under the Texas Business and Commerce Code, items which are fraudulently endorsed are not legally negotiable, and should not be paid against the account of the check-writer. Section 4.401(1) codifies that a check or other item with a forged endorsement is not properly payable, since the person receiving payment has no title to the item and no right to receive the proceeds. However, the paying bank does not normally have an opportunity to ascertain the genuineness of the endorsement. Section 3.417 of the Code expresses that the responsibility lies with the bank that accepted the fraudulently endorsed item, because, under the code, the paying bank would have no knowledge that the signature of the drawer of the draft is unauthorized. Hence, the means by which a consumer may seek to recoup the misappropriated payments is to notify the writer of the check of the fraudulent endorsement, and ask them to issue another check. This means that the check writer’s bank would technically be liable f
