What to do if a check made to you is stolen or cashed out by someone else? | Q&A

What to do if a check made to you is stolen or cashed out by someone else? 

I traded my car in at a dealership in New Jersey and was told that I would get a refund in the mail for the GAP insurance paid. I received a letter from the insurance company telling me that the money was refunded to the dealership and they should have sent me a check for $600.

Since I hadn’t received it, I called the dealership and they told me that the check was cashed. After getting a copy of the check, we could see that it was definitely not my signature.

They told me it looks like it was cashed at a check cashing place and they contacted the bank that issued the check to do the investigating. The check was made out to me and had both my name and address on the front.

Why do I have to wait for the investigation to be completed before I get the $600 replaced? It’s not my fault the check was obviously stolen. Also how could someone cash a check made out to me since they obviously had no ID that matched my name?


The dealership should not be delaying payment to you. And they know it. They have recourse against their bank and you, as their customer, should not have to wait a single day longer for a check to be re-issued and delivered to you.

Here is what your situation looks like legally:

In your case, a thief grabs a check meant for you (the payee), forges your signature (indorsement) and deposits the check in a bank that presents it and obtains payment. Under the Uniform Commercial Code, the check was not properly payable. Because the check was payable to your (the payee) order, your signature was necessary for any further negotiation of the instrument. The thief ’s forgery is not the payee’s (you) signature and cannot pass title to the instrument.

The payor bank must recredit the drawer’s account. In this instance, however, the payor bank has a remedy. The presenting bank breached the warranty that it was a person entitled to enforce the instrument, the warranty of good title. § 4-208(a)(1). The payor bank can shift the loss to the presenting bank, which will be left with its claim against the thief.


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