Under the fictitious payee rule, the payee's indorsement is not treated as a forgery.

Question

Quizplus · Accepted Answer

The fictitious payee rule states that if a check is made payable to a non-existent or fictitious payee, and an authorized agent of the drawer (e.g. an embezzler) fraudulently endorses the check for deposit or negotiation, the payee's endorsement is not considered a forgery. Instead, the bank may be held liable for paying out on the fraudulent endorsement.

Under the Fictitious Payee Rule, the Payee's Indorsement Is Not