554.4406 Customer’s duty to discover and report unauthorized signature or alteration. 1. A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customerthe items paid or provide information in the statement of account sufficient to allow thecustomer reasonably to identify the items paid. The statement of account provides sufficientinformation, if the item is described by item number, amount, and date of payment. 2. If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copiesof the items until the expiration of seven years after receipt of the items. A customer mayrequest an item from the bank that paid the item, and that bank must provide in a reasonabletime either the item or, if the item has been destroyed or is not otherwise obtainable, a legiblecopy of the item. 3. If a bank sends or makes available a statement of account or items pursuant to subsection 1, the customer must exercise reasonable promptness in examining the statementor the items to of the item. 3. If a bank sends or makes available a statement of account or items pursuant to subsection 1, the customer must exercise reasonable promptness in examining the statementor the items to determine whether any payment was not authorized because of an alterationof an item or because a purported signature by or on behalf of the customer was notauthorized. If, based on the statement or items provided, the customer should reasonablyhave discovered the unauthorized payment, the customer must promptly notify the bank ofthe relevant facts. 4. If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by subsection 3, the customer is precluded from assertingagainst the bank: a. the customer’s unauthorized signature or any alteration on the item, if the bank also proves that it suffered a loss by reason of the failure; and b. the customer’s unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank if the payment was made before the bank receivednotice from the customer of the unauthorized signature or alteration and after the customerhad been afforded a reasonable aid in good faith by the bank if the payment was made before the bank receivednotice from the customer of the unauthorized signature or alteration and after the customerhad been afforded a reasonable period of time, not exceeding sixty days, in which to examinethe item or statement of account and notify the bank. 5. If subsection 4 applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss, theloss is allocated between the customer precluded and the bank asserting the preclusionaccording to the extent to which the failure of the customer to comply with subsection 3and the failure of the bank to exercise ordinary care contributed to the loss. If the customerproves that the bank did not pay the item in good faith, the preclusion under subsection 4does not apply. 6. Without regard to care or lack of care of either the customer or the bank, a customer who does not within one year after the statement or items are made available to thecustomer (subsection 1) discover and report the customer’s unauthorized signature on orany alteration on the item is precluded from asserting against the bank the nt or items are made available to thecustomer (subsection 1) discover and report the customer’s unauthorized signature on orany alteration on the item is precluded from asserting against the bank the unauthorizedsignature or alteration. If there is a preclusion under this subsection, the payor bank maynot recover for breach of warranty under section 554.4208 with respect to the unauthorizedsignature or alteration to which the preclusion applies. [C66, 71, 73, 75, 77, 79, 81, §554.4406]94 Acts, ch 1167, §111, 122; 2011 Acts, ch 87, §5Referred to in §554.3417, 554.4208 Sat Dec 23 01:57:31 2023 Iowa Code 2024, Section 554.4406 (25, 0)
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