Definition: An endorsement is a banking requirement established for checks where the recipient has to sign and add his account information in order to cash or deposit the check. It is a procedure where the recipient acknowledges that he has received the check and that he is willing to do something with it.
What Does Endorsement Mean?
A check endorsement also includes the signature that the account holder provides at the front of the check form. This is important because the holder acknowledges that he is issuing a check for the amount written on it and directed to a specific recipient.
On the other hand, the beneficiary also has to acknowledge that he is receiving that amount of money from the holder. Thus, he can decide whether to exchange it for cash or to deposit the funds in his own account.
Endorsements should be handled carefully to avoid that the check gets cashed by someone else different than the intended recipient. If a check is endorsed with just the signature and gets lost somehow a person different than the original beneficiary can endorse his own account number and deposit the check on his behalf. A way to avoid this situation would be to cancel that specific check as soon as it gets lost.
Example
Jackie is a 73 year old woman. Due to her advanced age she normally doesn’t handle her own finances but a few days ago she had to issue a check for one of her grandsons to help him with certain payment. She signed the check properly but his grandson endorsed it with just his signature.
A few hours later he lost the check and now they are both worried that it falls into the wrong hands, which can cause that Jackie loses her money with a stranger. They quickly went to one of the bank’s branches to cancel the check and resolved the matter before it hurt Jackie’s finances.
