When conducting business, be aware of receiving fraudulent cheques for your products or services

Encashment of fraudulent cheques
Be aware of receiving fraudulent cheques. Verify the cheque with the banking institution before accepting same from customer.
Mr. C. was a business man and during the course of conducting business he received several cheques which totalled eighteen thousand dollars ($18,000.00) from one of his clients. He went to his bank and was able to cash the cheques. On a subsequent visit to the ATM, Mr. C discovered that the amount available for withdrawal from his account was less than the account balance by the amount of the value of the cheques.

The bank explained to the customer that since the cheques that were cashed were regarded as “uncleared effects” a hold or lien had been placed on his account in the amount of the value of the cheques.

Mr. C was not happy with this action taken by the bank and brought the matter to the Office of the Financial Services Ombudsman for a resolution of his dispute.

The OFSO was subsequently advised by the bank that its investigations had revealed that the signatures on the cheques may have been forged by a third party since the holder of the chequing account denied having issued any of the cheques. The bank also referred the matter to the Fraud Squad of the Police Service and a suspect was later charged with fraud. The matter is now before the court.

The OFSO informed the complainant that the encashment of the cheques was done in good faith and that it was the bank’s prerogative to put a hold on his account until the cheques were cleared.

After reviewing the circumstances surrounding this complaint the OFSO concluded that the bank was fair and reasonable in the action taken to recover the funds. The complainant was advised that he must await the outcome of the investigation of the matter by the relevant authorities.

In the event that the cheques were proven to be fraudulent, his only legal recourse would be against the individual or firm that benefited from his service or product which was purportedly paid for by the cheques.

Lessons learnt

The banks can put a hold on your account if they deem that you have deposited a fraudulent cheque. It is in your interest to ensure that the parties that you conduct business with are not fraudulent so that you are not inconvenienced later on.