Legal Question in Technology Law in Illinois

Re: Given fraudulant money orders

Probably none, but I would need more facts before I could offer any firm conclusions. Sometimes things like this happen due to the bank's error, but usually they result from the deliberate fraud of a third party. As long as your bank processed the money order in accordance with the law -- which it almost certainly did -- it will almost certainly not be liable for your loss.

The FDIC offers you no protection, since it insures only against the risk of your bank failing and not the risk of receiving a bad check.

You probably have recourse only against the person who sent you the money orders.

Banks often cannot tell whether a given money order will be honored or not -- especially when the document is genuine but has become the subject of a do-not-pay order or when it has been drawn against an account which had insufficient funds to cover the debt. There are laws which require banks to make deposited funds available after a certain amount of time, but these laws do not require banks to absorb the loss when a check or money order turns out to be invalid after the funds have been released. When you accept such a document as payment you the risk of it being dishonored falls on you and not your bank.