15 Set The Power and Risks of Blank Endorsements: Understanding Checks Payable to the Bearer
Endorsing a check is fairly simple, but there are a few things to know so that you do it correctly and your money is protected. Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest. Regular audits, either done internally or by a third-party auditor, can also be highly beneficial. They help in identifying procedural issues or potential vulnerabilities that could lead to fraud or loss.
- This endorsement prevents anyone else, other than the intended payees, from negotiating (or cashing) the check.
- All of these endorsement restrictions go in the same “ENDORSE CHECK HERE” box on the back of the check.
- Our team here at Remitly has put together this guide to help you learn how to endorse a check.
- How you choose to use the check will determine the type of endorsement you need.
Your bank’s app may provide these instructions, or you can contact your bank prior to preparing your deposit. To make a mobile endorsement, simply sign the back of the check with the words “for mobile deposit only.” Once you deposit a check remotely, retain it until you see the deposit posted to your account. How to endorse a check made out to multiple payees depends on what the check writer put on the front of the check. If the names are connected by the word “and,” as in Jim and Marsha Smith, banks usually require both parties to sign the back of the check before cashing it. For a third-party endorsement to work, the bank or other financial institution must know the original payee (you as the second party) approves the payment of the money to the third party. If you are going to deposit or cash your check in person, wait to endorse the check until you’re at the bank.
Be Careful When Signing Checks Over to Someone Else
That way you’ll be better at protecting yourself against check fraud. The check may “clear” your account right away if the funds are available but the checks in these situations are usually fraudulent. It can take days to discover the fraud and you must then repay your bank any funds you’ve withdrawn based on the fraudulent check. Unfortunately, other than asking the check writer to void this check and write another, the only way around this issue is to copy their incorrect spelling in your endorsement. Then you can provide your correct name in your official signature. When writing a check to the IRS, you’ll need to include the standard check information on it and some other required information.
- Banks frequently won’t accept checks endorsed this way unless the payee is present.
- Depending on specific guidelines enforced by each financial institution, this endorsement phrase may be included above your signature or below your signature.
- In general, the owner of a CD account must give notice prior to withdrawing funds before the time limit expires.
- When the writing is illegible, or the signature isn’t contained within the allotted area, the bank could refuse the check.
Ironic as it may sound, but the process is referred to as blank endorsement primarily because there are no specific or additional instruction as well as limitations applied on the bank check. If a check is endorsed but then lost or stolen, it can be cashed or deposited by unauthorized individuals. This risk is especially high with blank endorsements, which don’t limit who can cash or deposit the check. A restrictive endorsement includes not only the signature of the endorser but the words “For Deposit Only” and the bank account number or financial institution in which it is to be deposited. This prevents anyone else from cashing or depositing the check into an incorrect account or institution.
There are Benefits to Mobile Check Endorsement & Deposit
They help ensure that the funds are used according to the payee’s intentions and can assist in tracking the purpose or destination of the funds. Errors in naming the new payee or mismatches in signatures can lead to transactional hiccups, sometimes necessitating reissuance or additional bank visits. A check endorsement is the act of signing the back of a check, signaling permission for the check to be processed or cashed.
If you write checks, you’ll run out and need to order more at some point. Some banks provide complimentary checks when you open a checking account. A full endorsement is the same as a third-party check endorsement, which we will discuss in greater detail below. You must endorse the check next to the words “Pay to the order of” and the name of the person you’re transferring the check to. This is known as a blank endorsement, but other types of endorsements may change the steps you need to take when endorsing a check. Either way, you’re authorizing the bank to convert the check into cash on your behalf.
Understand the Implications of Multiple Names
If you’ve never really received a check you might not know how to endorse a check or even what a check endorsement is. The first thing we should get out of the way is that check endorsements are for people receiving a check, not sending a check. Learn all you need to know about check endorsements in the “How to Endorse a Check” segment in our Check Cashing series.
Are there any risks involved in using a blank endorsement on checks?
First, flip the check over and locate the endorsement section on the back. Then, write the business name exactly as it appears on the front of the check. Next, sign your name as the authorized representative of the business. Finally, if required, include any additional information or account numbers specified by your bank. Make sure to check with your bank or financial institution for any specific instructions or requirements they may have regarding endorsing business checks.
Before You Endorse a Check
Therefore, it’s crucial that the payer gets this information correct, when they’re filling out the check. In 2018, new banking regulations mandated the endorsement of electronically-deposited checks using Remote Deposit Capture (RDC) technology. Some institutions encourage you to write an account number when endorsing the check.
Restrictive Endorsement by Account
Even if your bank allows you to deposit a check, that check could come back in several weeks, resulting in the bank removing those funds from your account until everything gets cleared up. When someone writes you a check, you typically need to endorse it so that you can cash the check or deposit it. Endorsing a check helps the bank verify you as the recipient and working capital formula authorizes the bank to make the transaction. If the instrument is lost or stolen, it can be cashed or deposited by the finder. An incorrect or fraudulent endorsement can lead to serious repercussions, including legal disputes, financial loss, and, in some cases, criminal charges. Understanding the proper way to endorse a check is crucial to mitigate these risks.