Impostor Rule Law and Legal Definition
An impostor rule is a legal principle affirming that an impostor’s indorsement of a negotiable instrument is not a forgery. Imposter refers to a person who engages in deception under an assumed name or identity. The impostor rule makes an indorsed check effective if the drawer was induced to issue the check by an impersonator of the payee.[Title Ins. Co. v. Comerica Bank - California, 27 Cal. App. 4th 800 (Cal. App. 6th Dist. 1994)]
The impostor receiving the check may indorse it at the drawer's bank. Hence, the rule makes the drawer of the instrument responsible for the loss because the bank accepted the endorsement in good faith. The imposter rule is based on the assumption that between the bank and the drawer, the drawer is in a better position to prevent the loss.
