Do I Have to Endorse My Check Before I Deposit?
A common form of payment is a written check. Checks allow for drawing money from one account and depositing it into another. Individuals and businesses both use checks. Due to the nature of these financial instruments, individuals and businesses must follow specific rules to prevent fraud or embezzlement. Endorsing a check is one such tool.
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Purpose
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A bank requires a signature for a customer to cash or deposit a check. The signature indicates the individual's intent to deposit money into his bank account. The signature also indicates he is the proper owner for the funds deposited. Banks may spot-check signatures with an internal signature card to ensure they match. This attempts to prove the individual depositing the check is the proper owner.
Endorsement Types
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Different endorsement types exist for checks. A blank endorsement is just the name of the individual depositing the check. A special endorsement --- such as "Pay to the order of" --- allows the original check recipient to assign the check rights and funds to another individual. Restrictive endorsements provide specific directions for the check, such as "For deposit only." Misspelled checks require the recipient to endorse her name as written on the check's front side, even if inaccurate.
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Business Checks
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Business checks for deposit work in a similar manner. Companies, however, often utilize a rubber stamp to endorse checks. The stamp includes the company name, bank account number and the phrase "For deposit only." The use of an endorsement stamp prevents fraud or abuse from employees who may try to personally endorse the check and deposit the funds into a personal account.
Considerations
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Individuals or businesses concerned with check fraud can use alternate forms of payment. Online transfers, bank or cashier's checks and money orders are all payment forms that do not use a personal or business check. These may need endorsements, depending on the purpose or use of the payment. Holding checks for six months or longer can result in the check going stale. Banks can refuse to cash or deposit these checks due to age.
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