Pub. 5 2010-2011 Issue 5

January/February 2011 11 Extraordinary Service for Extraordinary Members. For more information, please contact Kansas Bankers Surety Co. at (785) 228-0000. tomer can normally hold the bank liable for paying a forged check, some customers object to the cost and effort required for a Positive Pay System that is not of benefit to them. Some larger banks, in their standard business account agreements, have now added language providing that if the customer chooses not to use fraud detection systems offered by the bank, such as Positive Pay, then the bank is not liable for any loss that would have been prevented by use of that fraud detection system. In a recent lawsuit entitled Cincinnati Insurance Co. v. Wachovia Bank (2010 WL 2777478) , the court agreed with the bank that even though the normal UCC provisions hold a bank liable, UCC 4-103 allows the UCC standard provi- sions to be overridden by the account agreement. The court determined that had the customer implemented the Positive Pay procedures, the payment of the $153,856.46 fraudulent check would have been prevented. The court held that the bank was not liable to the customer for the fraudulent check because the account agreement provided that, if the customer failed to implement the Positive Pay procedure, the bank would not be liable to the customer for the preventable loss. With customers and banks working together, many forged and altered check losses can be prevented. Banks can and should require that business customers implement reasonable loss-prevention procedures. Banks can modify their business account agreements to provide that if the customer chooses not to use reasonable procedures, then the preventable losses will be the customer’s loss and not the bank’s loss. Z Experience the power. Go to zach is understood .com. Power comes from being understood SM . A partner who really knows your game is a key part of any strategic approach. And when you trust the advice you’re getting, you know your next move is the right move. That’s what you can expect from McGladrey. That’s the power of being understood. Call Jim Richardson or Andrew Guill at 402.344.6100 or email: jim.richardson@mcgladrey.com or andrew.guill@mcgladrey.com. Is 6 enough? Yeah. You’re a little pumped. Team McGladrey Golfer Zach Johnson and his caddie, Damon Green. Banks can modify their business account agreements to provide that if the customer chooses not to use reasonable procedures, then the preventable losses will be the customer’s loss and not the bank’s loss.