The Importance of Reviewing Bank Statements

Carmichael Clark’s attorneys regularly represent banks in a variety of matters. The firm handles collection matters, loan workouts, bankruptcies, repossessions, and real estate foreclosures. Our attorneys also represent banks who have been sued by a customer or someone else. The firm’s attorneys are experienced in the laws related to banks and banking activities. Recently, one aspect of banking law that has importance for individual customers came up.

Have you ever wondered why your bank sends you account statements every month? It is not just for your convenience. Sending you statements every month can also shield the bank from liability if someone forges your signature on checks or engages in other unauthorized transactions out of your account.

Under the law, if your bank sends you an account statement, you have a duty to exercise reasonable promptness in reviewing the statement to determine whether any item was forged. If you can tell from the statement that an item was forged, you must promptly notify the bank of the relevant facts. If you do not promptly review your statement and promptly notify the bank of any forged item, you may be precluded from bringing a claim against the bank for that forged payment. Additionally, you also may not be able to assert a claim against the bank for any other forgery committed later by the same wrongdoer before you notified the bank if you failed to notify the bank of the first forgery within 30 days of receiving your statement.

However, you still may be able to assert a claim against the bank if you can prove the bank did not make the payment in good faith. Also, if you prove the bank failed to exercise ordinary care in making the payment then the loss resulting from the forged item is allocated between you and the bank according to the extent to which your failure to promptly review your statement and notify the bank and the bank’s failure to exercise ordinary care contributed to the loss.

But to fully preserve any claim you might have against the bank for a forged item, you must promptly review your statement and promptly notify the bank of the forgery, and you must do so within 30 days of receiving your statement. This is especially important today when identity theft is becoming more and more prevalent as technology advances, making it easier to gain access to your accounts. Thus, remember to review your bank statements soon after you receive them and quickly notify the bank of any strange, suspect entries.