While the correct way to endorse a check is far from complicated, it is important to understand the need to be cautious with a check beyond the simple act of signing it. Until it is endorsed, the check is of little value to anyone else should it be lost. However, once it has been signed, it can be potentially used by anyone who might find it.

Checks Are Financial Instruments...

A check is a promise from one party to another to pay whatever amount of money has been designated. Until proper endorsement, it has no value. For that reason, no check should be endorsed until it is presented to a banking institution. Once signed, it becomes a negotiable financial instrument.

Assigned Endorsements...

Any check may be endorsed with the phrase "for deposit only" and specify an account number. If that notation appears in the endorsement area along with your signature, it will be honored by the bank. However, if your personal account number appears on the check, it would put your confidential bank account number at risk should the check be lost.

Endorsement and Identification...

Some banks are reluctant to cash checks presented to them if the endorsement is not witnessed by them with personal identification presented at the same time. On those occasions when a check might be presented to the originating bank for cashing, it is better to sign the check at the moment of presentation to the bank.

Third Party Endorsements...

A check may be assigned to a third party with the notation in the endorsement area, "pay to the order of (third party name)." With your signature preceding this notation, the check becomes properly endorsed for third party usage. Many banks discourage customers from assigning checks to third parties, but it is a viable option to those who need to convert checks into cash. Most businesses will not accept "third party checks" unless they know you personally, and make an exception to their normal policy in this area.

Summary...

A great case can be made to only endorse a check at the moment of depositing or cashing it. The greatest defense to identity theft is to eliminate all potential breaches of confidentiality. Always remember that any check, once endorsed, is a viable source of cash. Withholding endorsement until it is required eliminates the possibility of someone else banking your money unless they forge your signature. Without proper identification, most people cannot convert your funds to their use anywhere. That is why endorsement of any check should be carefully tended to at the proper time and place.

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