Liability Issues When You Add Yourself as a Signer to Another Person’s Checking Account

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Counterfeit check scams have been around for a while. While most people are aware of these types of scams, it’s important that you do not fall for them. Everyone should know that they are liable to a bank for any loss associated with a counterfeit check — even if another owner of the account is the individual who fell for the scam and caused the loss.

Liability as a Signer on Someone Else’s Checking Account

Family members may sometimes agree to be added to a checking account owned by a relative. This can be a problem, especially when it comes to elderly relatives who may be more likely to fall for a scam. In such cases, the other signer is left on the hook for the full amount of the counterfeit check.

The contractual indemnification of the bank for any loss is in the terms of the account agreement that the authorized signers sign.

Risks to Be Aware of as a Signer on Someone Else’s Checking Account

Being a signer on a checking account with another person can expose you to several risks, especially when it comes to counterfeit check scams. Here are some key issues to be aware of so that you can be in the best position to avoid incurring liability:

  • Financial liability — If a counterfeit check is deposited into the account, the bank may initially credit the funds. However, once the check is identified as fake, the bank will reverse the deposit. Both account holders will be responsible for any funds withdrawn.
  • Risk of fraud — Scammers often use counterfeit checks in various schemes, such as overpayment scams, mystery shopping scams, or prize scams. They might ask you to deposit a check and then send a portion of the money back to them or to another person. This can lead to significant financial loss.
  • Legal complications — If a counterfeit check is deposited, both the primary account holder and the signer could face legal issues, including potential charges of fraud if the bank suspects involvement.
  • Trust issues — Sharing a checking account requires a high level of trust. If the signer is not vigilant or trustworthy, they might unknowingly deposit a counterfeit check, leading to financial and legal troubles.
  • Difficulty in detection — Counterfeit checks can be very convincing as they often look identical to legitimate checks. Even bank employees can sometimes be fooled, making it challenging to detect these scams early. If you think a check might be fake, don’t deposit it. Rather, you should immediately contact the bank that issued it to verify whether it is legitimate.

To protect yourself, it's crucial to be cautious about any checks that are deposited into the account. Be careful of agreeing to add yourself to a signer of any account that you do not control.

Alternatives to Being a Signer on Someone Else’s Checking Account

If you are looking for a way to help a loved one manage their financial matters, there are several tools you might consider, rather than being a signer on their checking account. For instance, a power of attorney can give you the authority to act on their behalf when it comes to financial matters. This can include depositing and signing checks, as well as making withdrawals, and handling a broad scope of other financial matters. If there is no power of attorney in place and your loved one has become incapacitated, you can petition the court for a conservatorship.

Another alternative that can allow you to handle a loved one’s financial affairs is a trust. If a trust is created that names you as trustee, you would have the authority to carry out any of the tasks outlined in the trust instrument. This can include signing checks on behalf of the trust.

Contact an Experienced Michigan Elder Law Attorney

If you’d like to learn more about how you can help an elderly loved one with their financial matters, a knowledgeable elder law attorney can help. With office locations in East Lansing, Mt. Pleasant, Grand Rapids, and Detroit, The Gallagher Law Firm offers a broad scope of elder law services to individuals and their families. To learn more about how we can assist you, contact us online, call (517) 853-1515, or email bpg@thegallagherlawfirm.com.