What is the signature warranty?

also known as signature verification, signature warranty is a form in which the bank or some other qualified financial institution confirms the legitimacy of the signature, as well as an application submitted by an individual who provided the signature. The intention of the warranty process is to reduce the chances of fraud in terms of the transfer of various types of financial instruments. In many situations, an institution that guarantees the authenticity of the signature, responsible if the signature is later found as fake.

Only authorized entities are considered acceptable guarantors and can offer signature warranty services. Most banks and similar financial institutions have the ability to verify signatures. It is also possible for a member or stock exchange to verify the signatures and extend the warranty. There are also independent agencies that have the ability to examine signatures and determine if they are authentic or counterfeits. In many cases, the actual process of exploring the signature and determining whether it is legitimate or not can be completed in a very short period of time.

The actual process involved in the examination of signatures may vary from one guarantor to another. Today, many guarantors use technology to explore all aspects of signature and make sure it has all the same features as verified signatures related to the same individual. For example, the bank would use an electronic copy of the signature obtained while running an individual and compared it with any signature in a recent document that needs verification. Only after the guarantor is convinced that the signature is not a counterfeit, is the warranty of signature.

The real signature warranty is often in the form of a seal that is attached to the guarantor's document. In some cases, the guarantor can use the stamp as a hint that the signature is authentic. The seal or stamp serves as assurance that the party that sells or converts securities is the legal owner and has the right to transfer assets as it considers appropriate.With the growing potential for fraud today, it may not require a signature warranty for substantial losses for the receiver. For this reason, the buyers should always request and receive a signature warranty when receiving securities.