As a clarification to bppump's info: While the funds may be released as 'available' after a certain waiting period, and even if the check clears the issuing bank, a bank is required to allow a depositor 60 days from the receipt of their monthly statement to dispute an item. Example: Suspect A steals a checkbook from Victim A in California, and Suspect writes you a check for some knives. You deposit the check, wait the prescribed period for your bank to release the hold, and send the knives off. Victim gets his bank statement, lets it sit for a few weeks, opens it and sees a check for $1000 that he never wrote, contacts his bank, and his bank sends your bank notice that the check is fraudulent, and requests a 'chargeback'. Your bank debits your account (if there is not enough money, they put you into the negative if necessary), and sends funds to the other bank, which credits their customer for the fraudulently written check. At this point it is between YOU and YOUR bank. You are out the money, and your knives. In my 12 years of bank management, this is how it has been. Now, if UCC codes come into play and it goes as far as legal action between the bank and the depositor, then that's just the way it is, but I have never had a depositor take it that far. It's a very gray area where usually it's the person that sold the knives and took the personal, out of town check that gets burned. In the above scenario, the check could be written on June 1, the statement could be received by the Victim on July 2, and they have 60 days from that point to dispute. That adds up to potentially 90 days from the time the check is written to the time the dispute is initiated.
What's more, I had an instance once where we knocked a client into the negative 5 months after the fact ( I just went to the file cabinet and checked to verify that timeframe). It was a fraud issue where the client got taken by a con-artist, along with about 100 other people and spanning 3 or 4 banks in my small town. Whenever possible, banks ALWAYS pass the loss on to the the depositor of the fraudulent/stolen/whatever check. It's a shoot first ask questions later type policy, where if they have to reverse it later they will, but this is very rare. If it gets to a legal standoff, then it does, but it's highly unlikely.
You, when you open an account and sign a signature card, basically take responsibility for everything that comes in and out of that account. Bottom line - don't take a personal check from someone you don't know, if the amount of the check is larger than you're willing to lose.
