Crossed cheque stolen - bank Liability

bottomdog

Our company (company A ) issued a cheque to Company B and the cheque got stolen in the post, the thief draws a line through the Company B's name on the cheque and writes his own name above it, and adds two initials

The theif presents it to his bank, the cashier ignores that fact that is a crossed cheque with two very large parallel lines
and lodges the cheque to the thief's account, the thief promptly withdraws the money and vanishes with out trace.

The cheque arrives to our bank ( Company A's bank ) and again the crossed lines are wrongly ignored and payment is made to the bank where the cheque was presented by the thief .

The money is withdrawn from our account, It is a four figure sum, so quite a lot of money.

What happens next is this.

The cheque is called back and we can all see it has been clearly crossed and falsely altered.

then the blame game starts

Our bank points the finger of blame at the bank where when cheque was lodged asking why did your cashier allow a crossed cheque by lodged to a person who it was not originally written out for.

The thief's bank points the finger of blame at our bank saying ' you should not have paid it either'. when we sent it to you you released the funds to us . so you also ignored the fact it was crossed.

Under the cheques act of 1958 Irish bankers are hugely protected for their own errors. Indeed the original act of Bill Of Exchange that governs cheques is very ambiguous as to assigning blame, it basically says the bank is responsible of it gets it wrong but is not liable . What ? yes it can mean anything . as the lawyer explained ' its a bit like saying I'll mind you kids and be responsible for them but I am not taking responsibility for them should anything happen - sort of.

we threaten the Ombudsman, the financial regulator, the Gardai, we are not childish enough to go the Joe Duffy route thank god.

Both banks join forces and say - mistakes happen - we are sorry for your trouble and we will assist the Gardai in catching the thief and hopefully the Gardai will help get your money back - but we the banks are not liable.

But we argue - the cheque was crossed and you both allowed a stranger to lodge it/clear it.

The banks reply - yes its an error but mistakes happen and our terms and conditions protect us from liability.

you can cross a cheque four ways

1 //
2 account Payee
3 and co
4 Not Negotiable

1 2 and 3 have no legal standing apparently we are told
4 has some strength over the others but also the banks are protected

The cheques act of ireland is full of protection clauses for the banks.

what the lawyers are saying is this, by crossing a cheque with or with our additional words of instruction 99.99% of the time a cashier would not dare lodge it or clear it. However if they do its tough luck but wait for it.......the bill of exchange law states the bank is liable - but does not say which bank -the clearing or the paying - the thief's bank or our bank, and the Cheqies Act sort of says bankers are not to blame for honest screw ups but might be HUH ?

THe ombudsman and Financial regulator were of no help to previous complainants so we have not engaged them yet.

There appears to be no legal precedent

and we are still without our money.

Can anyone give me some advice - what can we do?

My biggest question is which bank is to blame, the paying bank or the clearing bank ?

Or are they really protected by law, to be honest they seem to be as unsure as anyone, but still they refuse to pay.

The banks in question are AIB and Bank of Ireland, AIB is our bank.

Please advise

killers1

bottomdog wrote: »

Our company (company A ) issued a cheque to Company B and the cheque got stolen in the post, the thief draws a line through the Company B's name on the cheque and writes his own name above it, and adds two initials

The theif presents it to his bank, the cashier ignores that fact that is a crossed cheque with two very large parallel lines
and lodges the cheque to the thief's account, the thief promptly withdraws the money and vanishes with out trace.

The cheque arrives to our bank ( Company A's bank ) and again the crossed lines are wrongly ignored and payment is made to the bank where the cheque was presented by the thief .

The money is withdrawn from our account, It is a four figure sum, so quite a lot of money.

What happens next is this.

The cheque is called back and we can all see it has been clearly crossed and falsely altered.

then the blame game starts

Our bank points the finger of blame at the bank where when cheque was lodged asking why did your cashier allow a crossed cheque by lodged to a person who it was not originally written out for.

The thief's bank points the finger of blame at our bank saying ' you should not have paid it either'. when we sent it to you you released the funds to us . so you also ignored the fact it was crossed.

Under the cheques act of 1958 Irish bankers are hugely protected for their own errors. Indeed the original act of Bill Of Exchange that governs cheques is very ambiguous as to assigning blame, it basically says the bank is responsible of it gets it wrong but is not liable . What ? yes it can mean anything . as the lawyer explained ' its a bit like saying I'll mind you kids and be responsible for them but I am not taking responsibility for them should anything happen - sort of.

we threaten the Ombudsman, the financial regulator, the Gardai, we are not childish enough to go the Joe Duffy route thank god.

Both banks join forces and say - mistakes happen - we are sorry for your trouble and we will assist the Gardai in catching the thief and hopefully the Gardai will help get your money back - but we the banks are not liable.

But we argue - the cheque was crossed and you both allowed a stranger to lodge it/clear it.

The banks reply - yes its an error but mistakes happen and our terms and conditions protect us from liability.

you can cross a cheque four ways

1 //
2 account Payee
3 and co
4 Not Negotiable

1 2 and 3 have no legal standing apparently we are told
4 has some strength over the others but also the banks are protected

The cheques act of ireland is full of protection clauses for the banks.

what the lawyers are saying is this, by crossing a cheque with or with our additional words of instruction 99.99% of the time a cashier would not dare lodge it or clear it. However if they do its tough luck but wait for it.......the bill of exchange law states the bank is liable - but does not say which bank -the clearing or the paying - the thief's bank or our bank, and the Cheqies Act sort of says bankers are not to blame for honest screw ups but might be HUH ?

THe ombudsman and Financial regulator were of no help to previous complainants so we have not engaged them yet.

There appears to be no legal precedent

and we are still without our money.

Can anyone give me some advice - what can we do?

My biggest question is which bank is to blame, the paying bank or the clearing bank ?

Or are they really protected by law, to be honest they seem to be as unsure as anyone, but still they refuse to pay.

The banks in question are AIB and Bank of Ireland, AIB is our bank.

Please advise

What type of crossing was on the cheque? Was it 'a/c payee only' or just a general '& Co' one? Either way I would imagine the thief's bank is liable as they handled a stolen cheque & paid it into one of their customers account. Also the cashier should have been better versed in relation to handling cheques payable to a Company and being lodged through a personal account irrespective of initials on the cheque. From my memory of Banking the rules of returning a cheque unpaid within the 5 clearing days doesn't apply in the case of a stolen cheque...I think the thief's bank should overdraw his account, refund your money & pursue the thief with the assistance of the Guards to recover their loss.

bottomdog

killers1 wrote: »

What type of crossing was on the cheque? Was it 'a/c payee only' or just a general '& Co' one? Either way I would imagine the thief's bank is liable as they handled a stolen cheque & paid it into one of their customers account. Also the cashier should have been better versed in relation to handling cheques payable to a Company and being lodged through a personal account irrespective of initials on the cheque. From my memory of Banking the rules of returning a cheque unpaid within the 5 clearing days doesn't apply in the case of a stolen cheque...I think the thief's bank should overdraw his account, refund your money & pursue the thief with the assistance of the Guards to recover their loss.

The crossing was a simple two diagonal lines with no words written, no worse need to be written for it to be a perfect crossed cheque, the thief has emptied the account straight away and has left no funds in the account, they are reluctant to overdraw the account knowing they won't get the money back. also there could be a legal issue overdrawing that account

killers1

bottomdog wrote: »

The crossing was a simple two diagonal lines with no words written, no worse need to be written for it to be a perfect crossed cheque, the thief has emptied the account straight away and has left no funds in the account, they are reluctant to overdraw the account knowing they won't get the money back. also there could be a legal issue overdrawing that account

The 2 line simple crossing just means that the bank handling the cheque need to lodge the cheque through an account and it cannot be cashed, which they did. I'd still maintain that the general rule would be the bank that dealt with the thief are liable for the money. You used to be able to (and maybe still can) return a cheque unpaid reason stolen to another bank long after the clearing process. e.g. a stolen cheque is lodged & funds cleared & 2 weeks later the owner of the cheque discovers money coming out if their account fraudulently their bank could return the cheque to the bank where it was handled and the moneys refunded by the handling bank. In the UK they recently amended clearing rules to stop this facility and now banks have 6 days to notice a fraudulent transaction & return the cheque to the handling bank. The cheque can still clear in 4 and the money may have vanished. Ultimately the thief has defrauded his bank by lodging a stolen cheque into his account and they should be liable for the loss and have to take action to recover the funds themselves.

Solair

You really need to get onto the financial regulator (central bank) and file a formal complaint.

If the name on the cheque was altered, and this was obvious, they should have picked it up!!

Otherwise, what's the point of Cheque crossing in the first place

killers1

Solair wrote: »

You really need to get onto the financial regulator (central bank) and file a formal complaint.

If the name on the cheque was altered, and this was obvious, they should have picked it up!!

Otherwise, what's the point of Cheque crossing in the first place

A general 2 line crossing on a cheque is just an instruction that the cheque needs to be lodged into 'an' account whereas a crossing 'a/c payee only' means it has to be lodged into an account held in the name of the payee..

bottomdog

killers1 wrote: »

A general 2 line crossing on a cheque is just an instruction that the cheque needs to be lodged into 'an' account whereas a crossing 'a/c payee only' means it has to be lodged into an account held in the name of the payee..

Regardless of that, the issue of liability is still unclear .

killers1

bottomdog wrote: »

Regardless of that, the issue of liability is still unclear .

I was just pointing out the difference to Solair...

bottomdog

Solair wrote: »

You really need to get onto the financial regulator (central bank) and file a formal complaint.

If the name on the cheque was altered, and this was obvious, they should have picked it up!!

Otherwise, what's the point of Cheque crossing in the first place

Yes we can do that but that does still not answer my question. The question is who is Liable , we or either of the banks ?

bottomdog

Solair wrote: »

You really need to get onto the financial regulator (central bank) and file a formal complaint.

If the name on the cheque was altered, and this was obvious, they should have picked it up!!

Otherwise, what's the point of Cheque crossing in the first place

Yes we can do that but that does still not answer my question. The question is who is Liable , we or either of the banks ? thanks all the same

killers1

bottomdog wrote: »

Yes we can do that but that does still not answer my question. The question is who is Liable , we or either of the banks ?

The question is which of the banks is liable as you didn't fraudulently change the payee on the cheque and initial the amendment... I'm surprised a solicitor hasn't advised you to pursue the handling bank and written to them on your behalf.

bottomdog

killers1 wrote: »

The question is which of the banks is liable as you didn't fraudulently change the payee on the cheque and initial the amendment... I'm surprised a solicitor hasn't advised you to pursue the handling bank and written to them on your behalf.

We have engaged solicitors who have gone through the laws with us and they admit its highly confusing and we will need a commercial barrister's expert opinion, this will take a few days to arrange and will cost over several hundred euro just for a first look, . The law was written in the 1850s when language was different than now, and amended in the 1950s to basically say the bankers are liable for little or nothing. The banks position as written inside the cover of a cheque book, is that a crossed cheque is 'safer' but not safe. seems impossible to find an expert on this, the bankers themselves are

killers1

bottomdog wrote: »

We have engaged solicitors who have gone through the laws with us and they admit its highly confusing and we will need a commercial barrister's expert opinion, this will take a few days to arrange and will cost over several hundred euro just for a first look, . The law was written in the 1850s when language was different than now, and amended in the 1950s to basically say the bankers are liable for little or nothing. The banks position as written inside the cover of a cheque book, is that a crossed cheque is 'safer' but not safe. seems impossible to find an expert on this, the bankers themselves are

I'd suggest you email the Irish Payment Services Organisation (info@ipso.ie) to get their opinion on your query... It's their responsibility to ensure payment systems in this country operate in a safe & secure manner and covers all methods of payments. I'm sure they've come across this situation before and may be able to point you in the right direction before you go paying for the services of a Barrister...

bottomdog

killers1 wrote: »

I'd suggest you email the Irish Payment Services Organisation (info@ipso.ie) to get their opinion on your query... It's their responsibility to ensure payment systems in this country operate in a safe & secure manner and covers all methods of payments. I'm sure they've come across this situation before and may be able to point you in the right direction before you go paying for the services of a Barrister...

Killers thats the exact type of info I need, by the way the Ombudsman's office does to speak to anyone, I phoned them , and I got an automated service that asked for my name and address so they could send out a complaints form in the post. ( thank you for calling you call is important to us.....)

Phil h 1

If you bring the problem to the Ombudsman he will look at it as you have been let down by your bank and is obliged to challenge the bank to put the problem right and his word is final .When you bring it to him you can't afterwords bring it to a solicitor and vice verse. Both banks are wrong but the first bank that lodged it should be responsible.Due care and attention

killers1

bottomdog wrote: »

Killers thats the exact type of info I need, by the way the Ombudsman's office does to speak to anyone, I phoned them , and I got an automated service that asked for my name and address so they could send out a complaints form in the post. ( thank you for calling you call is important to us.....)

Forget the Ombudsman for the time being. Check out www.ipso.ie as they would seem to be the organisation who would have prior experience of your situation and may be able to advise you accordingly..

bottomdog

killers1 wrote: »

I'd suggest you email the Irish Payment Services Organisation (info@ipso.ie) to get their opinion on your query... It's their responsibility to ensure payment systems in this country operate in a safe & secure manner and covers all methods of payments. I'm sure they've come across this situation before and may be able to point you in the right direction before you go paying for the services of a Barrister...

The IPSO were very friendly and prompt . However they said that a crossed cheque without words CAN be lodged into any account, it just means it needs to go into 'a' account and not cashed. I pointed out you cannot cash a cheque in Ireland anymore. regardless they insisted a crossed cheque is transferable and as such it would appear we the company are liable for the loss but to get the bank to help you as they themselves are not experts on liability .

bottomdog

the ipso told me that a crossed cheque can be lodged into anybody's account unless it is marked ''account payee only'', or not negotiable , also long as someone signs it by changing the name, the AIB does not agree with this, In this sense what they AIB are saying is that a crossed cheque with just the two lines or acc payee means it must be lodged to 'a' account and not cashed over the counter, but given you cannot cash cheques in ireland anymore a crossed cheque is completely un- safe because criminals can simple change the name on ANY crossed cheque. All cheques regardless of markings and crossings can be lodged and ANY account account payee means account payee but its OK to change the name to write a new name above it !!!!just put initials on it .

killers1

bottomdog wrote: »

killers1 wrote: »

I'd suggest you email the Irish Payment Services Organisation (info@ipso.ie) to get their opinion on your query... It's their responsibility to ensure payment systems in this country operate in a safe & secure manner and covers all methods of payments. I'm sure they've come across this situation before and may be able to point you in the right direction before you go paying for the services of a Barrister...

The IPSO were very friendly and prompt . However they said that a crossed cheque without words CAN be lodged into any account, it just means it needs to go into 'a' account and not cashed. I pointed out you cannot cash a cheque in Ireland anymore. regardless they insisted a crossed cheque is transferable and as such it would appear we the company are liable for the loss but to get the bank to help you as they themselves are not experts on liability .

Their point about the crossing is as I mentioned earlier that it needs to go into 'a' account as opposed to and account in the name of the payee. Ultimately though you cannot be held liable for the monies as then the whole cheque payment system is flawed. The theif changed the payee on the cheque and fraudulently imitated the signatories by using their initials to enforce the change in payee. This is illegal. Looks like you'll need to go down the Barrister route but I can't see how you would be held liable at the end of it all. It's really a question of which bank finally accepts responsibility or agree to share the loss.

bottomdog

Phil h 1 wrote: »

If you bring the problem to the Ombudsman he will look at it as you have been let down by your bank and is obliged to challenge the bank to put the problem right and his word is final .When you bring it to him you can't afterwords bring it to a solicitor and vice verse. Both banks are wrong but the first bank that lodged it should be responsible.Due care and attention

the ipso told me that a crossed cheque can be lodged into anybody's account unless it is marked ''account payee only'', or not negotiable , also long as someone signs it by changing the name, the AIB does not agree with this, In this sense what they AIB are saying is that a crossed cheque with just the two lines or acc payee means it must be lodged to 'a' account and not cashed over the counter, but given you cannot cash cheques in ireland anymore a crossed cheque is completely un- safe because criminals can simple change the name on ANY crossed cheque. All cheques regardless of markings and crossings can be lodged and ANY account account payee means account payee but its OK to change the name to write a new name above it !!!!just put initials on it .

killers1

bottomdog wrote: »

Phil h 1 wrote: »

If you bring the problem to the Ombudsman he will look at it as you have been let down by your bank and is obliged to challenge the bank to put the problem right and his word is final .When you bring it to him you can't afterwords bring it to a solicitor and vice verse. Both banks are wrong but the first bank that lodged it should be responsible.Due care and attention

the ipso told me that a crossed cheque can be lodged into anybody's account unless it is marked ''account payee only'', or not negotiable , also long as someone signs it by changing the name, the AIB does not agree with this, In this sense what they AIB are saying is that a crossed cheque with just the two lines or acc payee means it must be lodged to 'a' account and not cashed over the counter, but given you cannot cash cheques in ireland anymore a crossed cheque is completely un- safe because criminals can simple change the name on ANY crossed cheque. All cheques regardless of markings and crossings can be lodged and ANY account account payee means account payee but its OK to change the name to write a new name above it !!!!just put initials on it .

Why don't you post this in the legal discussion forum and you might get an expert legal response?

Phil h 1

Good thinking

bottomdog

killers1 wrote: »

Why don't you post this in the legal discussion forum and you might get an expert legal response?

i tried but got no help there

Phil h 1

Well the first thing you have to do is write a formal complaint to your bank manager and he has to confirm receipt of your complaint with in five working days.Oh by the way keep a dated copy of all your correspondence between you and your bank.Now the bank have to let you know what there are doing about your problem. This hole process can take up to 40 to 60 days. If you feel that the bank are fobbing you off then you write to the ombudsman explaining your case and letting him know about your all the correspondence between you and your bank
I think the real problem here is between the two banks and if your bank values your business they should do all in their power to rectify your problem.

killers1

bottomdog wrote: »

killers1 wrote: »

Why don't you post this in the legal discussion forum and you might get an expert legal response?

i tried but got no help there

Try askaboutmoney.com

bottomdog

Phil h 1 wrote: »

Good thinking

Resolved - The AIB - our bank has agreed to pay us in full and pursue the Bank Of Ireland. It is an act of Goodwill though so the issue of liability remains unresolved. we are a very high profile firm so this outcome was not a complete surprise rather than draw a question-mark over the safety and integrity of our entire banking cheque clearing system. for us the matter is now closed....but I guess others will follow in our steps and their outcome is uncertain .

ah irish solutions to irish problems ...

Phil h 1

Very happy for you. the best of luck

killers1

bottomdog wrote: »

Phil h 1 wrote: »

Good thinking

Resolved - The AIB - our bank has agreed to pay us in full and pursue the Bank Of Ireland. It is an act of Goodwill though so the issue of liability remains unresolved. we are a very high profile firm so this outcome was not a complete surprise rather than draw a question-mark over the safety and integrity of our entire banking cheque clearing system. for us the matter is now closed....but I guess others will follow in our steps and their outcome is uncertain .

ah irish solutions to irish problems ...

Glad you got it sorted, I knew there was no way you'd be held liable.

killers1

killers1 wrote: »

bottomdog wrote: »

Phil h 1 wrote: »

Good thinking

Resolved - The AIB - our bank has agreed to pay us in full and pursue the Bank Of Ireland. It is an act of Goodwill though so the issue of liability remains unresolved. we are a very high profile firm so this outcome was not a complete surprise rather than draw a question-mark over the safety and integrity of our entire banking cheque clearing system. for us the matter is now closed....but I guess others will follow in our steps and their outcome is uncertain .

ah irish solutions to irish problems ...

Glad you got it sorted, I knew there was no way you'd be held liable.

And the only reason they call it an act of goodwill is so as not to admit liabilty and leave themselves open to being sued by you for negligence...

nlgbbbblth

bottomdog wrote: »

I pointed out you cannot cash a cheque in Ireland anymore.

This is incorrect.

bottomdog

nlgbbbblth wrote: »

bottomdog wrote: »

I pointed out you cannot cash a cheque in Ireland anymore.

This is incorrect.

I know if you write a cheque to Cash it cannot be cashed anymore

nlgbbbblth

bottomdog wrote: »

I know if you write a cheque to Cash it cannot be cashed anymore

Cheques given to third parties with "cash" as the payee are unwelcome as the beneficiary does not have to be identified by the bank. Therefore if the original recepient loses the cheque the lucky finder might be able to cash it.

However they can still be cashed. Totally depends on the bank and their procedures. There's no legal basis for refusing to cash them.

Encashment of cheques is certainly not as common as it was. But it's still done.