2025 Session Last amended: 2024 session

§ 336.4A-203 — Unenforceability of Certain Verified Payment Orders

Plain-Language Summary

This section applies when a payment order was not actually authorized by the customer but is still treated as the customer's order because the bank followed a commercially reasonable security procedure under section 336.4A-202. By a written agreement, the bank may limit how much it can enforce or retain payment on such an order. The bank cannot enforce or keep payment, however, if the customer proves the order was not caused, directly or indirectly, by a person entrusted with duties relating to payment orders or the security procedure, or by someone who gained access to the customer's transmitting facilities or obtained breach-facilitating information from a source the customer controlled.

336.4A-203 UNENFORCEABILITY OF CERTAIN VERIFIED PAYMENT ORDERS.

(a) If an accepted payment order is not, under section 336.4A-202(a), an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to section 336.4A-202(b), the following rules apply:

(1) By express agreement evidenced by a record, the receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order.

(2) The receiving bank is not entitled to enforce or retain payment of the payment order if the customer proves that the order was not caused, directly or indirectly, by a person (i) entrusted at any time with duties to act for the customer with respect to payment orders or the security procedure, or (ii) who obtained access to transmitting facilities of the customer or who obtained, from a source controlled by the customer and without authority of the receiving bank, information facilitating breach of the security procedure, regardless of how the information was obtained or whether the customer was at fault. Information includes any access device, computer software, or the like.

(b) This section applies to amendments of payment orders to the same extent it applies to payment orders.

History:

1990 c 582 art 1 s 11; 2024 c 93 art 5 s 4

History: History: 1990 c 582 art 1 s 11; 2024 c 93 art 5 s 4

Practical Notes

Even when a bank is otherwise allowed to treat an unauthorized wire order as the customer’s because it followed a commercially reasonable security procedure, the bank loses the right to enforce or keep the payment if the customer proves the breach did not come from its own insiders or from access to its own facilities or information. The bank may also agree in writing to limit how much it can collect on such an order.

Source: Minnesota Office of the Revisor of Statutes