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Check fraud and forgery are two of the biggest security problems faced by banks. In fact, according to a recent Ernst & Young study reported by the National Check Fraud Center, over 500 million checks are forged annually, with losses totaling more than $12 billion, not counting those incurred by other types of document forgery. Check fraud law is governed by Articles 3 and 4 of the Uniform Commercial Code (UCC). As a result, check fraud law has moved toward reflecting contemporary banking practices. This memorandum generally addresses check fraud litigation resulting from: (i) alterations to the check, (ii) forgeries of the maker's signature on either the face of the check or the payee's endorsement on the back of the check, or (iii) counterfeit checks created by a dishonest third party. If there is a policy implicit in the UCC's rules for allocation of losses due to fraud, it surely is that the loss be placed on the party in the best position to prevent it. The revisions to the law will likely result in three significant changes to the causes of action available in check fraud litigation. First, they may provide a new cause of action for contribution based solely on shared culpability. Second, they may expand conversion as a cause of action in check fraud cases. Third, they allow a drawee bank to recover from upstream banks for encoding errors that may result in shifting liability in some counterfeit check cases. Check Fraud Law Before addressing the law, it is important to know the relationships between parties typically involved in check fraud litigations. A customer is a person with an account at a bank. A drawer or maker is a person writing a check and is typically a customer of the drawee bank. A drawee is a party, typically a bank, required to pay out money when a check or draft is presented. A payee is the party entitled, by the creation of the check by the drawer, to receive funds from the payor bank, usually the drawee. Presentment is the