Pub. 7 2012-2013 Issue 1

www.nebankers.org 16 Extraordinary Service for Extraordinary Members. Signature Validation Program Banks Should Not Participate! Charles M. Towle , Senior Vice President, Kansas Bankers Surety Co. SECURITY OFFICER’S BY-WORD A BANKER CALLED ME THE OTHER day asking about the Sig- nature Validation Program. A customer of a bank was signing up to participate in the U.S. Savings Bond TreasuryDirect Program and needed his signature certified by a bank officer. The paperwork provided by TreasuryDirect indicated that a bank officer needed to certify the signature on the forms and include a bank stamp such as a Signature Vali- dation Stamp. I had never heard of the Signature Validation Stamp and I did not know the requirements of the TreasuryDirect Program, so I did some research. First, I researched the Signature Validation Program. The program, started in 2008, appears to be admin- istered by the same people who admin- ister the STAMP Medallion Signature Guarantee Program. A STAMP Sig- nature Guarantee is not allowed to be used on non-security documents. The new Signature Validation Stamp was designed to be used on non-security type documents. The idea behind the Signature Validation Program appears to be that some parties have required a notary witness when documents are completed and submitted. However, a notary provides little benefit to someone who relies upon it because it takes so little to become a notary and some notaries do not always take their responsibility seriously. When relying on a notary, it is not possible to evaluate the quality of the notary. Many people would prefer a bank officer, rather than a notary, witness a document. But further research showed that the Signature Validation is not any- thing like a notary signature. A notary only identifies the person andwitnesses that the person signs the document. Notaries do not have any responsi- bility to determine if the signer has authority to sign a document. They do not need to understand the document and related facts in order to make any determination about authority to sign. To join the Signature Validation Program, a bank must sign an SVP In- demnification Agreement before it can obtain a Signature Validation Stamp. In the SVP Indemnity Agreement, the bank agrees to indemnify everyone who relies on the stamp imprint and warrants that: (a) the signature on the document is genuine, (b) the signer was known by or otherwise satisfactorily identified, and (c) the signer had au- thority to sign the document. This is a very broad indemnity agreement in which the bank willingly chooses to financially protect everyone who relies on the signature for their loss if it is later found that the signer exceeded his authority when he signed that document. While a bank can know or identify a signer, warranting that a person has