Rules for Stamped Signatures on Checks. Most Americans have their paychecks directly deposited into their bank accounts by payroll each month and use cashless methods to send and receive money via PayPal, credit cards, and other digital technologies.
However, there are still instances when it’s necessary to use paper checks and ensure they’re legally endorsed before being cashed.
Uniform Commercial Code regulations have been developed over the years to specifically timestamp the legal process of sending or receiving physical checks versus cash in hand.
The UCC ensures a check is valid only when both signatures are published on the front then back of the physical check with proper identification documentation before it can be cashed.
Different Types of Signatures Are Permitted
The UCC defines the term a signature and specifies these three things: The way in which you sign is not necessarily important, or it matters where you sign when it’s at the back of the check.
You can either sign manually, by means of a device or machine, with ink on the back of the check as well as other places on the front/front and back of the check.
The use of any word, name, mark or symbol that you regularly use to identify yourself or your company at work is permitted to be used when signing checks provided they are legible and easy to read.
If you deposit a check without signing it or if you sign it with a signature that’s different from the one of the bank on the front of the check, chances are that your bank will not honor your check.
Be Aware of Fraud
This might seem like a bit of a small issue, but it’s important to monitor accountants who have been entrusted with signing off on company expenses and inventory.
For example, in Massachusetts, a bookkeeper perpetrated the largest fraud in the state’s history by embezzling nearly $7 million over a six-year period. Because she had access to the company CFO’s signature stamp, she was able to forge his name on millions of dollars worth of checks. If you use a rubber stamp to sign checks, it’s crucial to control who has access to it.
Noting this is just as much about personal security as company security and should not be taken lightly!
Theories state that policies set forth by courts which have dealt with cases concerning the repaying of money to forgers may have been created for a specific purpose.
The judgment seems fair when analyzed from an objective standpoint in that the rubber stamp companies are not at fault for the act of stealing and the theft of a stamp is not illegal; however, it can be said that legislatures may have created these laws because they wanted to protect the interests of business owners from scrupulous individuals who may use stolen stamps to hurt their many genuine clients.
It should be duly noted as well that states do differ in how incidents related to signature stamps are handled. This is where checking with your local authorities regarding compliance with these regulations becomes important.
To avoid problems with checks that have been improperly processed, it’s wise to invest in a machine with an internal meter that will record the number of checks processed. If you notice any irregularities, review the log to make sure checking has not been abused.
Banks require signature cards for all authorized check signers, so if an officer or other authorized employee leaves your company or is no longer responsible for signing checks, be sure to inform the bank of current authorized personnel.
If you use a signature stamp to endorse checks, set up a system through which one manager is responsible for entering and keeping track of check numbers as they’re processed so you can easily see if any are missing and which ones need to be recalled immediately when there are any questions about them.