My landlord is crazy and also there has been some check fraud.
June 27, 2007 2:43 PM   Subscribe

My landlord is crazy and also there has been some check fraud. Help me unravel my responsibilities

I hope you can help me figure out what my responsibilities are in this situation. I'm more than willing to help my landlord recover the money in order to maintain good relations, but I am a little worried that what she is asking me to do might have negative repercussions for me. Long complicated story to follow.

My landlord is crazy (in a well meaning, won't shut up, writes e-mails that don't make sense sort of way), and she e-mailed my partner and I to tell us that she just discovered that our June rent checks were not deposited to her account-- would we please cancel the checks and re-issue. Mr PadB and I both look at our accounts and see that the checks cleared around the 10th of the month. We e-mail her and tell her this, and send her copies of the canceled checks. I also look at past canceled checks to compare and I see that normally she endorses the check and writes "For Deposit only to [landlordsbank] [landlordsaccount number]" under her signature. Leaving aside why the heck someone would write their account number like that, on the check in question everything underneath the signature has been crossed out, and the check has been deposited to [someoneelsesbank], so it is pretty clear to me that someone found the checks, crossed out her bank info, and successfully deposited them into another account. I tell her this.

I should say that I don't suspect my landlord of trying to scheme us or anything like that. I don't think she would know how, and we have been in the apartment for 2 years now.

The landlord responds to both me and MrPadB to say that she is so thankful that we helped her unravel this and she is going down to the bank first thing in the morning.

I just got an e-mail from her, and I have to c&p a portion here because this is just hilarious and typical, and, well, I hope she does not use metafilter. Names and identifying details have been removed:

"Dear people,
Before I say anything further...the banking laws in our land protect the banks (big time) and not us unfortunate customers. As you can imagine [mypartner] (my wonderful friend and partner) and I
were right on the doorsteps of both the [landlordsbank] and [someoneelsesbank] Well - it AINT THEIR PROBLEM. IT IS THE PROBLEM OF THE BANKS ON WHICH THE CHECKS WERE WRITTEN. [MrPadBsBank] and [PaddingtonBsBank].
The third person involved is [your next door neighbor, who is also a tenant of mine] - also [MrPadBsBank] -
different branch. In the meantime the mgr at [someoneelsesbank] immediately started in investigation to determine to who's account this money was deposited and then withdrawm. Interesting?
You will be contacted by [mypartner] asking you to take your checks in
hand to your bank and FILE A FRAUD CLAIM. Then they file their claim against [someoneelsesbank] to collect their (your) money which has been deducted from everyone's account. //Rambles on to talk about how she is having back surgery and can't afford to pay her bills for several paragraphs//"

So here are my questions. Does this sounds right to you? I kind of feel like I paid the rent on time and once she endorses the check and drops it somewhere that is not my problem. It's not her banks problem either, since, apparently the checks never made it to them. I think it's [someoneelsesbank] problem, and I don't really know how I can prove to my bank that she didn't deposit the checks.

Regardless of all this I suppose I'll help her sort it out anyway in the interests of being a good tenant, but if I file a fraud claim with my bank, will I be put on a "likely fraud" list of any kind? Do you see any way that this could hurt me?

What would you do in my shoes?

posted by paddingtonb to Law & Government (20 answers total) 1 user marked this as a favorite
Even though the check(s) were written to her, someone ELSE committed fraud on YOUR account by endorsing/depositing them. I'm pretty sure she's right that *you* have to file the claim since it was regarding activity on your account.
posted by mrbill at 2:48 PM on June 27, 2007

I can't imagine why the third bank would allow someone to cash a cheque with the "for deposit only" line on it just crossed out. That's extremely strange.

I think you should file the claim - it was your cheque that was stolen and wrongly cashed after all, a crime was committed - and your landlord should have to wait for that to process to get the June rent.

I'm not sure if this is what you're getting at, but no, your landlord shouldn't have to take the hit for this. Work with the poor lady. Even if she was a terrible person (and it doesn't sound like this is the case) you don't want to make enemies of landlords.
posted by loiseau at 2:49 PM on June 27, 2007

Best answer: File the Fraud claim, some unscrupulous person now has a copy of your bank information, gathered from your check, with out a fraud investigation now, you may be setting yourself up for a huge loss in the future.
posted by kanemano at 2:54 PM on June 27, 2007

Best answer: I work for a bank, and the proper procedure for this, is for you to file a forged endorement fraud claim with your bank. Generally, you'll have to sign an affidavit and have the payee (your landlord) also sign it to say neither of you received benefit of the funds. The claim will be resolved, the funds will be credited back to your account, and you can reissue the check.

The loss will ultimately go to the bank where the checks were fraudulently deposited, but the claim must originate at your bank. There will be no negative effect on your account because of this.
posted by logic vs love at 2:57 PM on June 27, 2007 [4 favorites]

It's a hassle for you, no doubt - and morally, if your landlord lost the checks, it's kind of her fault too - but the reality is that you did not write checks to the person who cashed them, so you need to file a claim. I can't imagine why this would hurt you in any way - aside from wasting your time! Someone committed fraud, your landlady's a weirdo, but you should do the right thing and help her out.
posted by Dee Xtrovert at 3:00 PM on June 27, 2007

The checks were made out to her. She endorsed them (with her signature and account number) on the backs of the checks. I would say it is her responsibility to do the "leg work" to determine where the funds ended up (i.e. "deposited to [someoneelsesbankaccount]."

I'm not saying she's pulling a fast-one here ... but after endorsing a check made out to you, you can "sign it" over to a third-party for them to cash -- by doing so on the back of the check. May she have done this? If not, she is responsible for losing possession of the checks (which she endorsed). If that's the case ... lesson learned for your landlord: "Do Not Endorse Checks Until at the Teller's Window or at the ATM for Making a Deposit."
posted by ericb at 3:10 PM on June 27, 2007

But, yeah -- as has been stated, helping her out and taking the time to submit a fraud claim will make everyone feel good and strengthen the bond between landlord and tenants.
posted by ericb at 3:13 PM on June 27, 2007

so it is pretty clear to me that someone found the checks, crossed out her bank info, and successfully deposited them into another account

If they weren't cashed by "third party" and were indeed deposited to an account, I assume it will be clear and evident who that person is.
posted by ericb at 3:15 PM on June 27, 2007

Best answer: Leaving aside why the heck someone would write their account number like that

The last three banks I've used (Bank of America and two local credit unions) required me to do this when depositing checks in the ATM without a deposit slip.
posted by marionnette en chaussette at 3:38 PM on June 27, 2007

I work at a bank, 2nd logic vs love's comment.
posted by buriednexttoyou at 3:53 PM on June 27, 2007

I am a little bit rusty on negotiable instruments but I am fairly sure that any fraud claims are her fault and her responsibility. I believe (and perhaps someone can correct me) that attempts to prevent subsequent transfer of a check are invalid once an indorsement is made. If you gave her cash and she lost her purse on the way to the bank, it would not be your fault. I would have her file the fraud claim. I found using legalese and not being verbose is the best way to deal with such issues. Hopefully someone with better law experience can verify if I'm right or not.
posted by geoff. at 3:55 PM on June 27, 2007

Yes a bank's fraud department may differ from what is actually legally required, but it is still up to her to figure out what you need to do to make this better.
posted by geoff. at 3:57 PM on June 27, 2007

I would have her file the fraud claim.

It's not possible for the landlord to file a claim with her bank. Her bank has nothing to do with this, and could do nothing to help.
posted by logic vs love at 4:16 PM on June 27, 2007 [1 favorite]

Leaving aside why the heck someone would write their account number like that

The last three banks I've used (Bank of America and two local credit unions) required me to do this when depositing checks in the ATM without a deposit slip.

My last bank and current bank request that the account number be written under the signature, but don't technically require it. I do it all the time.

Just FYI.

Yes, you did your part. She essentially lost your money, so it's not your responsibility to pay it again.

Yes, you should talk to your bank, give them a copy of the canceled check, along with a "correctly" canceled check, and your landlord's contact info. See what they can do. I think after that, it's up to them. You certainly can't start playing private eye.

Your landlord should also file a police report for stolen property and whatever else covers illegal deposit of a check meant for her.
posted by The Deej at 4:25 PM on June 27, 2007

Best answer: This is all from memory, and my negotiable instruments book is packed away, but . . .

Three words: Not properly payable. Once your landlord wrote "for deposit only" on the check, she had endorsed the check and NO FURTHER ENDORSEMENTS OR TRANSFERS ARE VALID. Such a check can only be deposited with the bank named. Your bank is only obligated to pay to a bank with which the check was properly deposited. That it paid anyway, even though the check had obvious signs of forgery when "presented," was its own stupid decision. Consequences:

(0) Whoever pulled this stunt committed fraud.
(1) Your bank, having paid on a not properly payable check, must (by law) refund the amount to you.
(2) Your bank can demand the amount back from the bank where the check was deposited, since it was a bogus piece of paper in the depository bank's hands.
(3) That bank, in turn, can demand the amount bank from the despositor (and can take it out of the account), although I suspect there may not be money left to take back.

There's more, but my memory of such things sucks, and I would distrust anything I've written above for that reason. It's also not legal advice, and this stuff can vary from state to state. But the point is that the trail here starts when you call YOUR bank, point out that THEY screwed up, and go from there.
posted by grimmelm at 6:08 PM on June 27, 2007

IMO, she had it in her hot little hands, endorsed it, then misplaced it so it's her responsibility. I would assume that, once a check is endorsed, it's like cash. If you had payed in cash and she lost it, you wouldn't be expected to try and track it down.
posted by Foam Pants at 7:02 PM on June 27, 2007

Help her out with this. No one wants semi-nutjob landlord with an ax to grind.
posted by 26.2 at 7:39 PM on June 27, 2007

I do love the idea of making this her fault, somehow, but I think that it's correct that it was your check and your funds, hence fraud committed upon you. Basically, to your bank, your landlord is nobody and they have no responsibility to her whatsoever. You are the only person who can file the claim and burn a match under your bank's butt on this one. Sucks, but the truth.

Yes, it's insane that the bank passed the check through with a fraudulent endorsement. But it's so common nowadays that even in manual transactions the teller doesn't even really check the signature for obvious problems (like signing "Mickey Mouse" when the check reads "John Smith"). It's 10x more likely when the check is processed by an ATM and then enters the federal system and reaches your bank, and basically never has an actual human spend more than a second or two with it. There's an implicit trust that somewhere along the line, most likely at the end when it reaches you, the mistake will get noticed. In other words, you might think the banks are spending a lot of people-hours looking out for you, but they really aren't. Now that people don't even get paper checks back .... you see where this is going.

So this was a very easy fraud to commit. You will be able to get your money back without much of a problem.

And the likelihood is high that unless the fraudster was really dumb, they used some sort of identity theft and are not actually going to be caught. Say, they deposited it with a stolen ATM card and got cash back, for one simple iteration.
posted by dhartung at 8:37 PM on June 27, 2007

Response by poster: Thanks for helping me sort this out everyone! I'm going to take care of it today.
posted by paddingtonb at 9:26 AM on June 28, 2007

Response by poster: I wanted to let any future readers who come upon this post know that I did indeed file the claim with my bank. Unfortunately (for my landlord) they denied the claim because the addressee endorsed the check. So, landlord is out the money.

Lesson for us all-- be damn careful with checks that have been endorsed.
posted by paddingtonb at 2:35 PM on August 31, 2007

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