Uniform Commercial Code § 4A-202

Definition

A provision of the Uniform Commercial Code that offers a bank two methods of shifting to its customer the loss of an unauthorized funds transfer: (1) the person identified as the sender of the payment order for the funds transfer either authorized the order or is otherwise bound by it under the law of agency; or (2) (a) the bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer will be verified by a commercially reasonable security procedure and (b) the bank proves it accepted the payment order in good faith and in compliance with the security procedure and any written agreement or instruction of the customer restricting acceptance of payment orders issued in the name of the customer.