In simple terms, a Holder in Due Course (HIDC) is anyone who accepts a check for payment, such as a grocery store or a check cashing company. On the face of the check there cannot be any evidence of fraud, nor can the person accepting the check know about any fraud related to the check.
Under the Uniform Commercial Code (UCC), the recipient of the check is a Holder In Due Course and is entitled to be paid for the check. An HIDC can assign, sell, give, or transfer its rights to another party, who becomes the new HIDC with the same legal rights as the original Holder.
The statute of limitations for an Holder In Due Course to sue the check’s maker for its face value is 10 years from the issue date, or three years from the date the check was deposited and returned unpaid, whichever comes first. That's a long time
Past court cases have established legal precedent that you should be aware of.
If someone accepts a fraudulent check that looks just like yours, even if it is not
yours, they can claim Holder in Due Course status and you may be held responsible for the face value of the check, or more, even if you did not issue the check. You can read the court cases that have established this precedent by clicking here
Court rulings show that the best method for preventing some Holder In Due Course claims is by using controlled
, high security checks, like the Abagnale SuperBusinessCheck
. These checks have never been replicated, and have never been used in a check fraud scam