If you lose your checkbook and a check is forged in your name, you are generally not liable; it is the responsibility of the bank to know the depositor.

Of course, it is in your own best interest to report the loss immediately to your bank. There are some special circumstances under which you might have trouble. For example, a skilled forger who has a sample of your signature may conceivably withdraw your entire balance. Informing the bank promptly will save you problems and, possibly in some limited circumstances, loss of funds.

Make certain to check the next monthly statement that you receive to discover whether you have been charged for a forged check.

Lost or misplaced bank credit cards or department store charge cards should be reported as soon as the loss is discovered. While the original card holder may be liable for a maximum of $50 (per card) — card issuers buy insurance against a thief’s shopping sprees or purchase of a first class flight to some distant pleasure island — it is nevertheless to your benefit to have those accounts closed and new registration numbers issued to you (and anyone else authorized to charge purchases on those accounts). If there have been charges which you did not make, you will have to go through the burden of having the billing corrected, including having to demonstrate that the purchases were not in fact made by you. To the extent that credit card issuers bear losses due to forged credit card purchases, there may be increased fees associated with procuring credit cards for all customers. And finally, there is a civic responsibility to report crime to appropriate officials.

It is important, therefore, to have an up-to-date list of your credit card numbers in a safe place other than the wallet or purse in which you carry your credit cards.

Holders of several cards may wish to purchase credit card insurance. For a modest fee, the insuring company retains the list of all of your account numbers and immediately notifies all of the issuers once you call to report a loss or theft. These companies also supply warning labels to paste on your credit cards, which, it is hoped, will deter a thief from making criminal use of the accounts.

A bank customer standing in line one evening to buy some theater tickets, discovered, when he got to the window, that his wallet was missing. In the jostling crowd, a professional pickpocket, Jimmy the Lift, had deftly removed the wallet, which contained several credit cards and a bank electronic fund transfer (EFT) card and personal identification number (PIN). The victim immediately called the credit card companies to notify them of the loss, but did not call the bank, on the assumption that it was closed.

Jimmy the Lift, being conversant with electronic banking, made his first stop at a nearby branch of his victim’s bank. He let himself into the bank’s 24-hour vestibule with the card, then withdrew $300, the maximum permitted in cash withdrawals at one time.

The next morning the victim called the bank as soon as it opened for business. Because he notified the bank within 48 hours of his loss, his personal liability was limited to $50 and the bank restored the remainder of $250 to his account.

Not so alert, or fortunate, was another of Jimmy’s targets, who also lost his EFT card and PIN to Jimmy’s educated hands. Unlike the first victim, this man neglected to notify his bank, and Jimmy made off with his savings as well as $1,000 from his automatic line of credit. Moreover, because the victim did not look at the bank statement on which these withdrawals appeared, but simply filed it away for examination several months later, he could not recover any of the stolen money. Since more than 60 days had by then elapsed between the time the bank sent him the statement and he reported the error, his liability was unlimited. (See discussion of Electronic Funds Transfer Act)

Moral: Never carry both your EFT card and your PIN together in your wallet or purse, and notify your bank immediately if your card has been stolen or misplaced.

The proliferation of automatic teller machines (ATM’s) prompted criminals to find ways to put them to their own use. One New York City bank, for example, placed pairs of ATM’s in the lobbies of its branches, along with a telephone linked to a clerk who answered questions about the new machines. A depositor wanting to use an ATM would often find another “customer” already present, talking on the phone. Before the depositor finished his transaction, the other person would say that the clerk had just told him the depositor’s ATM was malfunctioning, but the other was working. Unsuspecting, the customer would take his card from the first ATM and move over to the other.

The phone user would then surreptitiously watch the customer punch his personal identification number into the second machine and make a note of it. When the depositor had completed his transaction, the thief would say that the clerk wanted the depositor to insert his card in the supposedly malfunctioning ATM so that bank officials could figure out what was wrong. In complying, the depositor would activate the ATM — enabling the thief, once the depositor left, to use the victim’s identification number to withdraw money from his account.

This scam cost New York bank patrons many thousands of dollars before it was discovered. At first the bank refused to ‘ take responsibility, contending that it was up to its customers to exercise due caution in the use of the automatic tellers. New York State’s Attorney General disagreed and threatened suit against the bank under the Electronic Funds Transfer Act. The bank finally agreed to make restitution to the victims, and to pay interest on the funds fraudulently withdrawn. The bank hastened to adjust the machines so that it was no longer possible to work the scam. But all banks in the United States may not have taken this precaution, so beware…