1. Handling Checks
Module 2

2. OUTLINE Check Components Negotiability Requirements Acceptability
Types of Checks
Exercise 2-1 Negotiating Checks – Refer to your textbook
Forged and Altered Documents
Endorsements
Identification and Signatures

3. Objectives identify the different components of a check
determine if a check is negotiable and acceptable
recognize warning signs that may indicate a forged or altered check
determine that each check has been endorsed appropriately
recognize acceptable forms of identification.

4. SECTION 1: COMPONENTS OF A CHECK
Develop the habit of looking at each check in a clockwise order to review the check components. Review to Exhibit 2-1 on page 10 in your textbook.
1. Look at the date
2. Compare the dollar amounts
3. Verify the drawer’s signature
4. Check the MICR encoding
5. Look at the drawee bank information

5. SECTION 2: NEGOTIABILITY
Negotiable Item – a document that can be transferred from one party to another by the endorsement or delivery of the document.

6. A check or other draft must have the following to be negotiable
The item must be written
Must be signed by the drawer of the check
Look for words of negotiability such as, “Pay to the order of” or “Pay to.”
There must be a specific dollar amount of the check
The item must be negotiable for money
A date must be required
The item must be payable to a payee or bearer

7. ACCEPTABILITY
Section 3

8. Criteria for Check Acceptance
1. The check must not be postdated or staledated
2. Drawer’s signature matches signature card
3. No alterations
4. Sufficient funds
5. No stop payment orders
6. Your bank’s customer, or drawn on your bank

9. Section 4 - Types of Checks
Personal Checks
Interests Bearing Account Checks
Business Checks
Blank Checks or Counter Checks
Traveler’s Checks
Substitute Checks

10. Drafts Drafts are easily confused with checks. Types of Drafts
Insurance Draft – made payable to one or more parties and are issued by insurance companies.
Convenience Checks – used to transfer balances from one credit card company to another or for any other purpose.

11. Forged and Altered Documents
Section 5

12. Forgery Anyone can commit forgery
The alteration of a document or instrument with intent to defraud.
Forgery is intentional

13. Characteristics The document has been altered from its original form
The document appears counterfeit. Meaning created to look like the original document.
The signature does not match the one on the signature card or identification card.
The texture of the document appears rough, indicating erasures.
Check should have at least one perforated edge.
Color on check smears when moist.

14. Procedures for handling Forged or Altered Documents
Compare bank and routing numbers to the numbers on the check.
Compare the account name with the drawer signatures.
Ask customer to re-endorse the documents.
Verify identification.
Consult your supervisor when in doubt.

15. Endorsements
Section 6

16. Principles of Endorsements
All endorsements should be in ink.
Checks should be endorsed in your presence.
The check should be endorsed exactly as the name appears on the payee line of the check.
A check made payable to joint payees with the designation “and” must contain the endorsements of all the payees.
When the designation “or” is used, only one endorsement is necessary.
The letter “X” is a legal endorsement.

17. Endorsements Types
General or Blank – Most common type. Only shows the name of the payee.
Special – signed by the payee and names another person to whom the check is being transferred.
Restrictive – imposes limitations on what can be done with the check.
Qualified - a type of restrictive endorsement that attempts to limit the responsibility of the endorser. The most common qualified endorsement is “without recourse”.
Conditional - imposes on the bank the responsibility of determining whether the condition included in the endorsement has been fulfilled.
Stamped – is made with a rubber stamp, often by businesses.

18. Forged Endorsements
Forgers intentionally come in to the bank or drive –in window during busy times. They want to divert your attention. Never let the presenter hurry your examination of the check or the identification. Always examine identification carefully for alterations.

19. Identification and Signatures
Section 7

20. Acceptable forms of Identification
Valid in-state driver’s license.
Permanent Resident Card (Green Card) or Matricula Card
Signature Card
Valid passport
Current Military Photo ID
Local Company Photo ID
Recognition by a bank officer you know
Bank check cashing card
Whatever identification the bank accepts from elderly or handicapped customers

21. Second Forms of ID Current bank charge card
Current local store charge card