Legal Question in Credit and Debt Law in New York

Joint Banking Accounts and Fraud

Person A has joint checking account with Person B.

Person A has credit card. Person B subsequently intercepted "convenience" checks from said account, forged Person A's name to endorse and deposited into joint account. Can Person A avoid liability to the credit card company? If bank is liable to credit card company for wrongfully cashing check, can bank then go Person A because funds were deposited into an account with Person A's name on it? Second scenario: Person B applied for, and obtained credit card in name of Person A. Convenience checks from said account were fraudulently endorsed by Person B and deposited into joint account. Liability of Person A? Sounds like a law school exam but it's not!!! Any input appreciated.


Asked on 5/15/00, 7:51 pm

1 Answer from Attorneys
Stuart Williams

Re: Joint Banking Accounts and Fraud

Can Person A avoid liability to the credit card company? If the funds are in A's account still, they can & should be returned from there; if not, then it matters whether it was A who withdrew them or not. I assume B took them, A knew nothing of all this while it was happening, was reasonably careful with the checks, and B has taken the money and left; A should not ultimately be liable at all, clearly, except that there are some cases having to do with safeguarding of one's checks; I just don't think this is it.

2nd scenario: same idea as the first. It's strange that B put the money in the joint account but it doesn't matter if B then withdrew the money and left. If the money's still there, A must return the money, sorry.

Difference between lawschool exam and reality is that you might have to prove the facts, i.e., the forgeries, and failing to be convincing on the facts, you can end up with liability that in theory shouldn't be yours, A.

-- Stuart Williams, Esq.

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Answered on 7/04/00, 2:25 am


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