Notary Bulletin

California State Treasurer: No Selling IOUs Without Notarization

In yet another demonstration of the growing reliance on Americas Notaries to protect the public against fraud, California Treasurer Bill Lockyer has ordered that state-issued IOUs  which the economically troubled government is temporarily using to pay its bills  cannot be redeemed without a notarized bill of sale.

The notarization requirement was added to protect the state and individuals receiving IOUs from potential fraud, Lockyer said.

The states decision to issue IOUs in lieu of actual checks has spawned a cottage industry online where recipients are selling the paper for cold cash. If asked to notarize a bill of sale for a warrant, Notaries should take care to positively identify the signer and be alert for any discrepancies or signs of fraud, such as the signers ID not matching the signature on the bill of sale being notarized.

The IOUs, officially known as registered warrants have already attracted the attention of would-be buyers offering cash to recipients in urgent need of funds on sites like Craigslist.

In response, State Treasurer Bill Lockyer posted a notice on his Web site that third parties who buy IOUs must present a notarized bill of sale signed by the payee whose name appears on the registered warrant, or the warrant wont be redeemable. Banks, credit unions, investment banks, brokerage firms and other financial institutions are exempt from this rule. Some financial institutions initially cashed the IOUs for customers at face value. But many major banks have stopped the practice, which may spur online sales.

The State Treasurers office has a toll-free hotline for questions about registered warrants at (888) 864-2762. The hotline is available Monday through Friday 7 a.m.4 p.m. Pacific Time.

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