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Why do you need to sign a check on the back when you deposit it to your account?

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7 Answers

up vote 19 down vote accepted

I actually had to go to the bank today and so I decided to ask.

The answer I was given is that a check is a legal document (a promise to pay). In order to get your money from the bank, you need to sign the check over to them. By endorsing the check you are attesting to the fact that you have transferred said document to them and they can draw on that account.

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4  
Technically the check is an order to pay on demand to a named individual. The endorsement is an order by you (the recipient) to pay a third party on demand. (In this case the bank) You can endorse a check multiple times, but that's an archaic use of checks these days. –  duffbeer703 Sep 18 '10 at 16:16
    
@duffbeer Thanks for the technical details. I know that bank manager didn't go into too much detail and I'm sure I didn't remember it exactly how she stated it. –  George Marian Sep 18 '10 at 17:15
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@duffbeer703 Isn't writing a check an archaic use of checks these days? –  Yuck Jan 27 '12 at 13:28
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The best reason for endorsing a check is in case it is lost. If the back is blank, a crooked finder could simply write "pay to the order of " on it and deposit it in his own account.

You do not need a signature for the endorsement. The safest way to endorse a check is to write "FOR DEPOSIT ONLY" followed by an account number, in which case the signature is not needed. most businesses make up rubber stamps with this and stamp it the minute they receive a check. That way it has no value to anyone else.

Depositing checks is increasingly going the way of the dodo. Many businesses today use check truncation - the business scans the check in, sends the digital image to the bank, and stores the check. I was surprised that Chase already has an applet for iPhones that you can use to deposit a check by taking a picture of it!

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In my experience, you don't need to endorse a check with a signature to deposit it into your account. You do if you are exchanging the check for cash. Businesses usually have a stamp with their account number on them. Once stamped, those checks are only able to be deposited into that account. Individuals can do the same.

I have had issues depositing insurance and government checks in the past that had both my and my wife's name on them. Both of us had to endorse the check to be able to deposit them. I think this was some kind of fraud prevention scheme, so that later one of us couldn't claim they didn't know anything about the check.

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You don't have to sign it, but you should to prove you are intended recipient should there be dispute later. –  MrChrister Sep 17 '10 at 20:17
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So the bank can (theoretically) compare that signature to the ID you provide, showing that the names and signatures match and that you are the person to whom the check was written.

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This really doesn't make any sense as a security check. The ID by itself would be enough to verify that you are the person to whom the check was written to. Comparing the signature to the ID doesn't really seem to add any value. –  JohnFx Sep 17 '10 at 16:08
    
but whats the purpose? –  Vitalik Sep 17 '10 at 16:08
    
I guess if it's written to John Smith and some other John Smith gets his hands on the check. But what are the chances? And it would be really easy to track where the money went. Yet we still do it with every check (or suppose to do) –  Vitalik Sep 17 '10 at 16:12
    
also they say "if your name is misspelled" then you should endorse it with the same spelling mistakes. In this the signature will not match what the bank has on file. –  Vitalik Sep 17 '10 at 16:24
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A bank isn't going to compare your signature to your ID. They're going to compare it to the signature card they have on file. When you opened an account, the bank had you sign a card. That is the "master" copy of your signature. –  msemack Sep 17 '10 at 16:53
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Paper trail of who did the deposit. Less significant for a personal account, but a bigger deal for accounts that are used by multiple people (e.g. a corporate checking account).

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I believe the banks are protecting themselves when they "require" your endorsement. Years ago. they used to ask for your endorsement, and not require it. If you endorse the check, it legally authorizes them to debit your account, if the check is later returned for non-sufficient funds (NSF). It mostly protects the bank, and not the customer.

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When the check is deposited, the bank verifies the signature in the check matches your signature in file.

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I am still not sure what's the point. Isn't the name enough on the front? What's the danger of a wrong person depositing money to your account? –  Vitalik Sep 17 '10 at 16:01
    
To make sure someone else isn't depositing money into your account - cuz we wouldn't want that to happen :) –  Eric Petroelje Sep 17 '10 at 16:02
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@Vitalik - If I had to guess, I'd say the "danger" has more to do with preventing money laundering. –  Eric Petroelje Sep 17 '10 at 16:03
    
This always seemed a little strange to me. It seems like they are protecting me from some stranger depositing checks into my account. Frankly, if anybody wants to DEPOSIT money into my account, I really don't care who they are. –  JohnFx Sep 17 '10 at 16:09
    
@JohnFX - but what if they want to deposit your money into their account by impersonating you? –  justkt Sep 17 '10 at 16:18
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protected by Chris W. Rea Dec 14 '11 at 0:16

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