U.S. flag

An official website of the United States government, Department of Justice.

NCJRS Virtual Library

The Virtual Library houses over 235,000 criminal justice resources, including all known OJP works.
Click here to search the NCJRS Virtual Library

Impostor Problem and Forged Indorsements: New Risks Under the Revised Uniform Commercial Code

NCJ Number
Journal of Security Administration Volume: 23 Issue: 2 Dated: December 2000 Pages: 13-24
Steven B. Dow J.D.
Date Published
December 2000
12 pages
This article assesses the substance of the changes in the impostor rule in the Uniform Commercial Code (UCC) and considers how they will increase the risk of financial losses for firms and other checking account customers.
A popular check fraud is for the offender to impersonate someone else in order to dupe an individual or firm into issuing a check to the impostor. The impostor then forges the payee's endorsement on the check and absconds with the funds or becomes insolvent, leaving innocent parties to allocate the loss among themselves. For most of the last half century, such fraud was governed by Section 3-405 of the UCC. The code section, along with the rest of UCC Articles 3 and 4, has recently undergone a major revision (1990). This revision of the impostor rule will increase the risk of loss to businesses and consumers that use checking accounts. This article first provides some background on the legal nature of a checking account. It then explains the basic operation of the impostor rule under the UCC with respect to forgery loss allocation. The article then discusses the changes to the impostor rule that the Revised Uniform Commercial Code will produce and how they likely will impact loss allocation among innocent parties. Finally, it considers some problematic aspects of the new impostor rule. 62 notes


No download available