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WaMu Gave Grandma's Money to Crooks

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New York Times Reporting on ICT

The article appeared on May 21, 2007.

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Sunday, March 05, 2006
Uniform Commercial Code Article 3
My uncle -- who's been helping my grandmother get this mess sorted out -- pointed me to the UCC after he came across it on this site (ckfraud.org) while doing some research into check fraud. I told him I wouldn't be surprised if it turned out this site were run by a company like the one that ripped off Grandma. Still, it contained some useful information that helped point me to more reliable sources, like this Cornell University site on the UCC:

http://www.law.cornell.edu/ucc/3/3-406.html

Here's what I gather is the relevant legal code:

3-406. NEGLIGENCE CONTRIBUTING TO FORGED SIGNATURE OR ALTERATION OF INSTRUMENT.

* (a) A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection.

* (b) Under subsection (a), if the person asserting the preclusion fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss, the loss is allocated between the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.

* (c) Under subsection (a), the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. Under subsection (b), the burden of proving failure to exercise ordinary care is on the person precluded.


Good luck making that out! Whoever wrote that should be forced to sit on hold with Washington Mutual while they write that out 1000 times. Then they should be re-enrolled in a freshman university composition class.

After re-reading it several time, this is what I finally figured out it was probably trying to say (at least as it applies here):

"We the lawmakers behind this legislation have worded this section confusingly and ambiguously enough that, in the case of a dispute between a large financial corporation and one of its account holders, the dispute can be decided according to whatever way an empowered legal authority sees fit to interpret 'ordinary care'. If you're the account holder, and you're lucky, you'll get to split the difference."


I'm not even sure the checks -- that the scammer, I repeat, printed up themselves -- qualify as "forged instruments". But I believe the purported recording of my grandmother's authorization (which I now have a copy of) should. I'm going to add links to both these documents some time this week.

More info on the UCC can be found on Wikipedia. Of special interest:

The Code, as the product of private organizations, is not itself the law, but only has the force of law if enacted by states. The ALI-NCCUSL has also established a permanent editorial board for the Code which has issued a number of official comments and other published papers concerning the Code. Although these commentaries do not have the force of law, courts interpreting the Code will often cite them as persuasive authority in determining the effect of one or more provisions.

The Code, in one or another of its several revisions, has been enacted in 49 of the 50 states.

Uniform Commercial Code (wikipedia.org)


So it sounds like -- in making reference to the UCC as the law in a dispute with a major financial corporation over a fraudulent check -- you may well be disputing a party that helped write the law. Good luck.

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