I respectfully dissent. I agree with the majority that the amended complaint does not state a cause of action under the California Uniform Commercial Code section 3406, subdivision (b). However, plaintiff has adequately alleged a cause of action for common law *496negligence. I agree with the distinction the majority recognizes between the broad foreseeability that is relevant to establish the existence of a duty and the factually specific foreseeability that may establish a breach of that duty or causation, but the distinction leads to exactly the opposite conclusion. The facts here may eventually show that Neiman Marcus committed no breach of its common law duty, or that plaintiff’s claim is defeated by affirmative defenses such as comparative negligence, but they provide no principled basis for denying the existence of the duty that our Supreme Court recognized in Sun ’n Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671 [148 Cal.Rptr. 329, 582 P.2d 920] (Sun ’n Sand). The fact that Sun ’n Sand concerned a bank while this case involves a retail merchant hardly provides an acceptable basis for recognizing a duty in one case and denying it in the other. Certainly the majority opinion points to no reason why a bank and a large retail merchant that extends credit to its customers should be treated any differently in the respect that is relevant to this case.
“The existence of a duty of care toward an interest of another worthy of legal protection is the essential prerequisite to a negligence cause of action, determined as a matter of law by the court.” (Software Design & Application, Ltd. v. Hoefer & Arnett, Inc. (1996) 49 Cal.App.4th 472, 478 [56 Cal.Rptr.2d 756].) “ ‘ “Duty” is merely a conclusory expression used when the sum total of policy considerations lead a court to say that the particular plaintiff is entitled to protection.’ ” (White v. Southern Cal. Edison Co. (1994) 25 Cal.App.4th 442, 447 [30 Cal.Rptr.2d 431].) Those competing policy considerations include “the foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost, and prevalence of insurance for the risk involved.” (Rowland v. Christian (1968) 69 Cal.2d 108, 113 [70 Cal.Rptr. 97, 443 P.2d 561].)
Plaintiff alleges that when Young repeatedly presented Neiman Marcus with checks in large amounts drawn on plaintiff’s personal checking account made payable to Neiman Marcus, for payment of Young’s personal obligations on her credit card accounts, Neiman Marcus owed plaintiff the duty to inquire whether Young was authorized to apply the checks against her own obligations before accepting the checks for that purpose. In Sun ’n Sand, supra, 21 Cal.3d at pages 692, 694-695, the court recognized a limited “duty of inquiry” in a similar factual circumstance. In that case, an employee obtained authorized signatures on checks for small sums made payable to United California Bank (UCB) drawn on her employer’s bank account. The employee then altered the checks by increasing the sums payable. Upon *497presentation of the altered checks, UCB permitted the proceeds of the checks to be deposited into the employee’s personal account maintained at UCB. When the fraud was discovered, the employer sued UCB for common law negligence. The employer asserted that UCB had breached its duty of care in permitting checks made payable to the bank to be deposited in the personal account of a party who was neither the drawer nor the drawee of the checks. (Id. at p. 692.) Applying the Rowland factors, the Sun ’n Sand court concluded that “an attempt by a third party to divert the proceeds of a check drawn payable to the order of a bank to the benefit of one other than the drawer or drawee suggests a possible misappropriation” and that “Sun ’n Sand’s allegations define circumstances sufficiently suspicious that UCB should have been alerted to the risk that Sun ’n Sand’s employee was perpetrating a fraud. By making reasonable inquiries, UCB could have discovered the fraudulent scheme and prevented its success.” (Id. at pp. 694-695.) The court emphasized that the duty it was recognizing, though “narrowly circumscribed,” is activated “when checks, not insignificant in amount, are drawn payable to the order of a bank and are presented to the payee bank by a third party seeking to negotiate the checks for his own benefit.” (Id. at p. 695.)
The duty recognized in Sun ’n Sand has been applied in subsequent cases. In Joffe v. United California Bank (1983) 141 Cal.App.3d 541 [190 Cal.Rptr. 443], the check in question was made payable to an investment company and the company’s trust account at Wells Fargo Bank. The investment company did not deposit the check into the trust account named as a payee, but deposited it into its own account at another bank, the Bank of America. The plaintiffs sued Bank of America for negligence. Relying on the duty recognized in Sun ’n Sand, the court held that “[u]nder these circumstances—a check for a substantial amount, payable to an escrow, or trust, or similar entity at another bank, with inadequate indicia, on the face of the check regarding the representative authorized to negotiate the instrument—. . . the risk to the drawer is sufficiently foreseeable to impose a duty on a depositary bank ‘not to ignore the danger signals inherent’ in an attempted negotiation by a third party.” (Id. at p. 556.)
Similarly, in E. F Hutton & Co. v. City National Bank (1983) 149 Cal.App.3d 60 [196 Cal.Rptr. 614], an employee fraudulently endorsed and deposited corporate checks payable to various payees into his personal account. The bank accepted the checks without any attempt to verify the indorsements or the employee’s authority to deposit the checks into his own account. The court held that the bank had a duty of inquiry to the maker of the checks, citing the fact that the checks were in substantial amounts and were payable to payees at another bank, and bore inadequate indicia that the *498employee was authorized to negotiate them. (Id. at p. 68.) The court quoted from Sun ’n Sand the admonition that a bank “ ‘cannot ignore the danger signals inherent in such an attempted negotiation. There must be objective indicia from which the bank could reasonably conclude that the party presenting the check is authorized to transact in the manner proposed. In the absence of such indicia the bank pays at its peril.’ ” (Id. at p. 67.) Referring to the intervening decision in Joffe v. United California Bank, supra, 141 Cal.App.3d 541, the E. F Hutton court stated, “The Joffe decision did not limit the negligence cause of action only to the situation where the check or checks are drawn payable to the order of a bank, and neither do we.” (149 Cal.App.3d at p. 68.)
More recently, in Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138 [26 Cal.Rptr.3d 401], the court reaffirmed the continuing validity of Sun ’n Sand. Although affirming the general rule “under California law, [that] a bank owes no duty to nondepositors to investigate or disclose suspicious activities on the part of an account holder” (id. at p. 1149), the court noted, “California courts have recognized one situation in which a bank has a duty to nondepositors to investigate a suspicious banking transaction. In Sun ’n Sand ... the California Supreme Court held a bank has a ‘minimal’ and ‘narrowly circumscribed’ duty of inquiry ‘when checks, not insignificant in amount, are drawn payable to the order of a bank and are presented to the payee bank by a third party seeking to negotiate the checks for his own benefit.’ ” (Id. at p. 1151, fn. 3.) Quoting from Chazen v. Centennial Bank (1998) 61 Cal.App.4th 532, 545 [71 Cal.Rptr.2d 462], still another case acknowledging the vitality of Sun ’n Sand, the court in Casey continued, “ ‘Sun ’n Sand and its progeny . . . have held banks to be subject to a duty of care toward nondepositors only in narrow factual circumstances: Each case involved the bank’s liability for allowing a person to deposit a check, payable to someone else, into a personal account, under circumstances that should have alerted the bank to the possibility of fraud.’ ” (127 Cal.App.4th at p. 1151, fn. 3, citations omitted.) In Chazen, the court went on to observe that “[i]t is not clear whether the decisions can be applied to other factual circumstances.” (61 Cal.App.4th at p. 545.) In the case now before us, except for the fact that defendant is a large retail store that extends credit rather than a bank, the circumstances are exactly the same: the defendant “allow[ed] a person to deposit a check, payable to someone else, into a personal account, under circumstances that [allegedly] should have alerted the [defendant] to the possibility of fraud.” (Ibid.)
In support of its contention that it was under no duty here, Neiman Marcus relies heavily on two decisions that, as the majority says (maj. opn., ante, p. 492, fn. 12), do not support its position. In fact, both recognize and *499confirm the principle that the majority here rejects. In both Karen Kane, Inc. v. Bank of America (1998) 67 Cal.App.4th 1192 [79 Cal.Rptr.2d 712] and Software Design & Application, Ltd. v. Hoefer & Arnett, Inc., supra, 49 Cal.App.4th 472, checks were presented by the payee of the check so that the fraud was not readily apparent from the face of the instrument and the risk of harm to the drawer was not foreseeable. In Karen Kane, an employee embezzled money from his employer by having the employer issue checks to fictitious payees based on falsified purchase orders. Posing as the fictitious payees, the employee cashed the checks at a check-cashing store. (67 Cal.App.4th at p. 1196.) “The checks were printed, unaltered checks which bore genuine signatures and were deliberately issued by Karen Kane in what appeared to even Karen Kane to be the regular course of business. . . . There is no claim that the checks or endorsements were forged, or that funds were paid to other than the payees selected by Karen Kane, albeit selected as the result of internal fraud.” (Id. at pp. 1194—1195, italics added.) That the checks appeared to be properly payable to the person attempting to cash the checks rendered the facts “quite dissimilar” to the circumstances in Sun ’n Sand (id. at p. 1200) as they are to the facts in the present case.
Likewise, in Software Design, banks deposited into accounts in the name of a fictitious entity funds that a financial advisor had misappropriated from the plaintiff and transferred to the banks through brokerage accounts also in the name of the fictitious entity. (Software Design & Application, Ltd. v. Hoefer & Arnett, Inc., supra, 49 Cal.App.4th at pp. 480-481.) The court held that the banks did not owe plaintiff a duty of care because there were no suspicious circumstances that placed them on notice of the likelihood of fraud. The court distinguished Sun ’n Sand and its progeny, explaining that “[t]he danger signals triggered in these cases all stemmed from the particular circumstances of the checks, endorsements or depositors, where the person attempting to negotiate the check is not the payee. Here, no checks were presented to either bank for deposit. Rather, funds were deposited into the precise accounts to which they were directed by wire transfer. The accounts at the banks were the identified and intended destination of funds wired from the brokerage accounts . . . .” (Ibid.) In contrast, in the present case, the checks Young presented to Neiman Marcus for payment of her personal debt were not applied to “the precise accounts to which they were directed.”1
*500The factors that must be considered in determining the existence of a legal duty, as articulated in Rowland v. Christian, supra, 69 Cal.2d 108, were considered by the Supreme Court in Sun ’n Sand. Foreseeability of the risk is “ ‘the chief element’ ” (Sun ’n Sand, supra, 21 Cal.3d at p. 695) and the potential for fraud is apparent from the face of a check presented by one who is neither its maker nor payee. “[T]he bank is confronted with an obvious irregularity when the drawer’s dishonest employee attempts to negotiate such checks for his own benefit. The bank does not have to be especially vigilant; its agent need only read what appears on the face of the check to be warned that a fraud may be in progress.” (Id. at p. 696.) Accepting a check from one who is neither the maker nor payee creates a significant risk of financial harm to the maker if the circumstances are such that a reasonable person would suspect that the person presenting the check is not authorized to do so. When, as here, the third party checks are credited to the account of one who had no right to present them, it is certain that plaintiff suffered injury, and there unquestionably is a close connection between the acceptance of the checks and plaintiff’s injury. While other factors may also have contributed to the injury, such as plaintiffs own negligence, that is a matter of defense and does not bear on the analysis of duty. Similarly, while normally there may be no moral blame in accepting a third party check, one who credits that check to the account of a person he should have suspected had no right to apply it to her own account is not blameless. After considering all of the Rowland factors, including the policy of preventing future harm and the consequences of imposing a duty to exercise care, the Supreme Court concluded that a duty of inquiry does arise when a bank is presented with checks naming it as the payee by a person other than the drawer who seeks to apply the check to his or her personal account. “[T]he bank’s obligation is minimal. We hold simply that the bank may not ignore the danger signals inherent in such an attempted negotiation. There must be objective indicia from which the bank could reasonably conclude that the party presenting the check is authorized to transact in the manner proposed.” (Id. at pp. 695-696.)
The bank in Sun ’n Sand, like Neiman Marcus and the majority here, claimed that “a duty of inquiry would be excessively burdensome and therefore should not be imposed.” (Sun ’n Sand, supra, 21 Cal.3d at p. 695.) The Supreme Court explicitly rejected this contention. “We are not persuaded that commerce will be so impeded by a duty of inquiry in this context that we should depart from the fundamental principle that actors are liable for *501reasonably foreseeable losses occasioned by their conduct.” (Id. at p. 695.) The insignificance of the burden is further suggested by the allegations in the amended complaint that it is both the standard practice in the industry and Neiman Marcus’s corporate policy to make an inquiry when presented with a third party check for payment on a credit card account. There is no support either in the record or in logic for the majority’s assertion that recognizing a duty of inquiry would require a retail merchant “to stop his business every time he received such a check in order to make an independent inquiry of the drawer.” (Maj. opn., ante, at p. 490, italics omitted.) As Sun ’n Sand pointed out, the duty is “narrowly circumscribed” and “minimal.” (Sun ’n Sand, supra, 21 Cal.3d at p. 695.) It is triggered only by the presence of circumstances that should cause a reasonable person to suspect the likelihood of fraud, which is not an everyday occurrence, and then requires only reasonable steps to confirm the authority of the person presenting the check to apply it to his or her own account. This duty may be met by examining documentation or possibly an explanation provided by the person presenting the check, an inquiry to the drawer, holding the check in abeyance for a brief period after notifying the drawer of its presentation, or undoubtedly other means. Whether the steps taken are reasonable may well become a jury question, but that is no different from what is required in any other negligence case.
It may well be that there are circumstances under which the presentation of a third party check would not raise suspicions in the mind of a reasonable person. But in other circumstances the likelihood of fraud will be apparent. Sun ’n Sand and its progeny confirm that the use of a third party check to pay one’s own obligations is not the norm and in some circumstances the irregularity may be “obvious.” (Sun ’n Sand, supra, 21 Cal.3d at p. 698.) The proper reconciliation of the principle enunciated in Sun ’n Sand and the demands of commerce is that when the circumstances are such that the presentation of a check by a person who is neither the drawer nor payee would cause a reasonable person to question the authority of the presenter to use the check for his or her own benefit, the duty of inquiry imposed by Sun ’n Sand arises. If the circumstances do not reasonably give rise to such suspicions, there is no such duty.2
*502The majority opinion states that here, in contrast to the situation in Sun ’n Sand, “we are presented with Neiman Marcus’s acceptance of third party checks, payable to Neiman Marcus, in satisfaction of a customer’s legitimate debt to the store for the purchase of goods.” (Maj. opn., ante, at p. 492.) But the majority does not explain what is different about a bank accepting a third party check made payable to itself for deposit to the account of one who is not the maker of the check and a retail merchant accepting such a check payable to itself and depositing it to the account of one who is not the maker of the check. There is as much reason to question the authority of the person presenting the check for deposit to his or her own account in one situation as in the other. Were the presenter authorized to apply the check to his or her own account, the deposit would be “legitimate” in either case. The further statement in the majority opinion, that “there is no contention that when Young proffered the checks for payment of her accounts there was anything appearing on the checks that would lead the store cashier to question whether plaintiff also had a Neiman Marcus store account” (maj. opn., ante, at p. 492), discloses the fundamental error in the majority’s analysis. The whole point of the holding in Sun ’n Sand, as well as the claim asserted in the amended complaint, is that when Young personally presented the cashier with plaintiff’s checks made payable to Neiman Marcus, the fact that Young was neither the maker nor the payee of the checks was reason to question whether the checks were intended for deposit into her account rather than into an account that plaintiff himself may have had, and in fact did have, at the store. Neiman Marcus did “not have to be especially vigilant; its agent need only read what appears on the face of the check to be warned that a fraud may be in progress.” (Sun ’n Sand, supra, 21 Cal.3d at p. 696.) The number and size of the checks and the personal shopper’s knowledge that Young was making purchases far beyond her known means are additional circumstances that may have heightened reasonable suspicions.
The majority opinion does not explain which of the Rowland factors that the Supreme Court held militate in favor of recognizing a duty in this situation apply differently in the case of a retail merchant.3 As the Supreme *503Court made clear in Sun ’n Sand, “[i]t is [the bank’s] conduct in crediting the embezzler’s account with checks drawn payable to [itself] that forms the basis for relief . . . .” (Sun ’n Sand, supra, 21 Cal.3d at p. 693.) That conduct is precisely the same in the present case. Insofar as there is any difference between the bank in Sun ’n Sand and Neiman Marcus here, the difference provides greater reason for recognizing a duty of inquiry here. The plaintiff in Sun ’n Sand was not a depositor of the bank and had absolutely no relationship with it. Here, as Neiman Marcus could have readily determined, plaintiff was its customer and the holder of a Neiman Marcus charge account. The majority does not explain why, when presented with sizable checks drawn on the account of another person and made payable to itself, the bank in Sun ’n Sand but not Neiman Marcus had the duty to make a reasonable inquiry to determine if the checks were properly credited to the account of the person who presented them.
I do not suggest that under all circumstances a duty of inquiry arises upon the presentation of a third party check. That the check is presented by one who is neither the maker nor the payee is indeed one important factor that must be considered. However, the amended complaint alleges numerous additional circumstances that a reasonable fact finder could find would alert a reasonable person to the likelihood that Young had no right to apply the third party checks to her personal account. These circumstances include the size and frequency of Young’s purchases in relation to her known income, the close relationship between Young and her personal shopper who encouraged and facilitated her purchases, Young’s unusual practice of personally delivering to the store checks in sizable amounts on successive days, and the fact that the checks were drawn on plaintiff’s personal checking account, rather than on a corporate or business account. Whether these circumstances were sufficient to cause a reasonable person to question Young’s right to apply plaintiff’s personal checks to the payment of her own obligations is a question of fact that plaintiff is entitled to have a jury determine.4
*504The majority states that recognition of this qualification confuses the court’s task of defining the scope of a legal duty with application of the duty to particular facts. (Maj. opn., ante, at p. 489, fn. 9.) Not so. The duty that follows from Sun ’n Sand and the other cases cited above is the duty to make an inquiry before applying to the presenter’s account a third party check that the recipient should reasonably suspect has not been authorized by the maker of the check. Or, stated more generally, it is the duty to inquire before accepting for payment a third party check that one should reasonably suspect has been misappropriated. This is a determination of whether “the category of negligent conduct at issue is sufficiently likely to result in the kind of harm experienced that liability may appropriately be imposed on the negligent party.” (Ballard v. Uribe (1986) 41 Cal.3d 564, 573, fn. 6 [224 Cal.Rptr. 664, 715 P.2d 624].) The circumstances surrounding Young’s misapplication of plaintiff’s checks in this case go to whether this “particular plaintiff’s injury was reasonably foreseeable in light of a particular defendant’s conduct.” (Ibid., italics omitted.) Ballard recognizes that the court should make the former determination before the jury decides the latter question. The majority can hardly dispute that harm is foreseeable when one accepts and applies a check that he should suspect has been misappropriated. However, the majority preempts the role of the jury. It holds, in effect, that because Neiman Marcus is a retail merchant rather than a bank, the circumstances could not possibly have caused it to suspect that Young had no authority to apply to her accounts plaintiff’s checks not made payable to her.
In the final analysis, it must be recognized that the majority’s decision is a departure from “the fundamental principle that actors are liable for reasonably foreseeable losses occasioned by their conduct.” (Sun ’n Sand, supra, 21 Cal.3d at p. 695.) If, under the circumstances, Neiman Marcus should reasonably have foreseen a loss to plaintiff when it applied his checks to pay Young’s obligations, there is no reason why it should not bear responsibility for that loss, subject to such defenses as may apply. The majority refuses to “extend”—I would say “apply”—Sun ’n Sand to this situation, thus relieving Neiman Marcus of liability even if a trier of fact would find plaintiff’s loss to have been entirely foreseeable, simply because Neiman Marcus is a retail merchant rather than a bank.
Plaintiff’s common law negligence claim is not displaced by the provisions of the California Uniform Commercial Code.
Although the majority opinion does not rely on this ground, my conclusion that the demurrer should not have been sustained also requires consideration *505of the additional argument that Neiman Marcus makes in support of the ruling, that plaintiff’s common law negligence claim is displaced by the provisions of the California Uniform Commercial Code.
California Uniform Commercial Code section 1103 declares that the California Uniform Commercial Code is supplemented by “the principles of law and equity,” but only if such principles are not “displaced by the particular provisions” of the code. In Sun ’n Sand, the court rejected the argument that a common law negligence cause of action based on the narrow duty of inquiry that it recognized was displaced by any provision of the California Uniform Commercial Code. The court reasoned that there is no specific provision intended to apply to this factual situation. Although the California Uniform Commercial Code has been amended numerous times since Sun ’n Sand was decided, no amendment has been directed at limiting the scope of a payee’s duty when presented with a third party check.
Contrary to Neiman Marcus’s suggestion, plaintiff’s claim has not been displaced by California Uniform Commercial Code section 3401, subdivision (a), which provides that “[a] person is not liable on an instrument unless ... the person signed the instrument. . . .” Neiman Marcus argues that “[sjince the checks written by Young were forged, Bums was not liable for those charges and the bank paid those checks out of its own funds.” Since the California Uniform Commercial Code “articulates a loss distribution scheme for forged drawers’ signatures on checks” by placing the risk of loss on the drawer’s bank, the argument continues, plaintiff’s remedy was to seek recourse from his bank, which honored the forged checks, and he may not recover from Neiman Marcus, the party that merely accepted the checks and transmitted them for payment. I disagree.
Plaintiff’s claim is not based on the fact that the checks Neiman Marcus accepted were forged. At least two of the means by which Young allegedly misappropriated plaintiff’s money made no use of forged checks. Plaintiff alleged that some checks were presented with no signature and others were signed by plaintiff but misappropriated when Young induced Neiman Marcus to credit them to the wrong account. The claim is based on the allegation that Neiman Marcus breached a duty of care when it accepted plaintiff’s checks in payment of Young’s debt without inquiring as to her authority to divert the funds to the discharge of her personal obligations. (See Sun ’n Sand, supra, 21 Cal.3d at p. 693 [“It is [the bank’s] conduct in crediting the embezzler’s account with checks drawn payable to [the bank] that forms the basis for relief. . .”].)
For this reason, Fireman’s Fund Ins. Co. v. Security Pacific Nat. Bank (1978) 85 Cal.App.3d 797 [149 Cal.Rptr. 883] is distinguishable. In Fireman’s *506Fund, an employer’s insurance company, acting as the employer’s subrogee, sought to recover $25,000 stolen from employer using a forged company check. When the company’s bank refused to credit the stolen funds back to the company’s account, the insurance company paid the employer and filed an action to recover the funds from the collecting bank. The trial court sustained the bank’s demurrer without leave to amend. On appeal, the court affirmed, observing that “Fireman’s is suing the wrong party. If it has a cause of action against a bank, it is not against [defendant], but against [the company’s bank] for breaching its primary contractual obligation to its customer . . . and for violating its implicit duty under section 4401 to pay only checks ‘properly payable.’ ” (Fireman’s Fund, supra, at p. 805, fns. omitted.) The court held that any common law claim for negligence against the collecting bank was preempted by the California Uniform Commercial Code. The court distinguished Sun ’n Sand primarily on the ground that “the check in Sun TV Sand did not involve a forged drawer’s signature as did the check in question in the case at bar.” (Fireman’s Fund, supra, at pp. 813-814, 821 [“It is worth repeating that, unlike Sun TV Sand, supra, 21 Cal.3d 671, our case deals essentially with payment over a forged drawer’s signature, and a collecting bank’s liability to the noncustomer drawer for such payment” (fn. omitted)].) The court explained that the forgery “brings into play code section 3418 [authorizing under certain circumstances the drawee of a forged check to recover the amount of the check from the person to whom or for whose benefit payment was made] which does articulate a loss distributive scheme that displaces an action for common law negligence.” (Fireman’s Fund, supra, at p. 814.)
Lee Newman, M.D., Inc. v. Wells Fargo Bank (2002) 87 Cal.App.4th 73 [104 Cal.Rptr.2d 310] is similarly distinguishable. In Newman, two employees fraudulently endorsed and thereby misappropriated their employer’s checks, depositing the funds in their personal bank accounts. (Id. at p. 76.) The employer filed an action against the employees’ bank, seeking to recover damages based on common law negligence. The court held that the common law negligence claim was displaced by California Uniform Commercial Code section 3405, which expressly governs the rights and liabilities of persons paying or taking an instrument bearing a fraudulent indorsement made by an employee who has been given responsibility by his or her employer for such instruments. (87 Cal.App.4th at pp. 80-81.) The court held that because the “particular provisions” of that section are controlling, the common law cause of action for negligence has been displaced.
Although California Uniform Commercial Code section 3401 would govern any claim by plaintiff against his bank for paying on the check, no provision of the California Uniform Commercial Code governs plaintiff’s claim against Neiman Marcus for accepting the third party checks.
*507I would reverse the judgment and remand the matter for a trial to determine, among other issues, whether the circumstances were such that Neiman Marcus should have suspected that Young had no right to apply plaintiff’s checks to her personal account, if so whether Neiman Marcus took reasonable measures to determine her authority to do so, and all affirmative defenses that might be raised such as plaintiff’s comparative negligence and the bar of the statute of limitations.
On May 20, 2009, the opinion was modified to read as printed above. Appellant’s petition for review by the Supreme Court was denied July 29, 2009, S173556. Corrigan, J., did not participate therein.
The out-of-state authorities cited by Neiman Marcus are also distinguishable. Under the state laws applicable in each case, the plaintiff was required to show that the defendant accepted a fraudulent check with actual knowledge of the fraud or in bad faith. For example, in Watson Coatings v. American Exp. Travel (8th Cir. 2006) 436 F.3d 1036, an employer filed an action against a credit card company under Missouri’s Uniform Fiduciaries Act, which expressly “ ‘relieves] banks of their common law duty of inquiring into the propriety of each transaction conducted by a fiduciary’ and . . . prevents] ‘banks and others who typically deal with fiduciaries [from being] held liable for the fiduciary’s breach of duty absent either (1) “actual knowledge” of breach or (2) knowledge of sufficient facts to constitute “bad *500faith.” ’ ” (Watson Coatings, at p. 1040.) The court noted that under Missouri law “[m]ere suspicious circumstances” are insufficient to show bad faith. (Id. at p. 1041; see also Hartford v. American Express (1989) 74 N.Y.2d 153, 162 [544 N.Y.S.2d 573, 542 N.E.2d 1090] [rejecting claim against credit card company based on a non-uniform provision of the Uniform Commercial Code unique to New York and Virginia that requires a showing of bad faith “determined by a subjective test of actual knowledge rather than an objective test which might involve constructive knowledge”].)
In Grand Rapids Auto Sales, Inc. v. MBNA America Bank (W.D.Mich. 2002) 227 F.Supp.2d 721, 726, the court refused to extend the holding of Sun ’n Sand to a situation in which a bank receives a check in payment of amounts owed on a credit card account. The court explained, “The key distinction between this case and Sun ’N Sand and Allis Chalmers [Leasing v. Byron Ctr. St. Bank (1983) 129 Mich.App. 602 [341 N.W.2d 837]] is that the banks in those cases actually inspected the checks and should have been alerted by the circumstances—a check drawn payable to the order of the bank by a drawer not indebted to the bank and presented by a third party seeking to negotiate the check for his own benefit—that the employee’s conduct may have been improper. In other words, suspicious circumstances on the face of the checks should have alerted the banks to the potential for loss to the drawer. In contrast, pursuant to its standard procedure, [the bank] processed the [drawer’s] checks without examining them. *502[Citation.] Thus, [the bank] was not aware of any suspicious circumstances and could not have foreseen or prevented harm to [the drawer].” (Grand Rapids Auto Sales, Inc. v. MBNA America Bank, supra, 227 F.Supp.2d at pp. 726-727, fn. omitted.) The outcome of that case is consistent with the limited duty of inquiry recognized in Sun ’n Sand and the application of that duty here. The present case does not involve payment to a financial institution that mechanically processes a high volume of checks without personal contact with the person presenting the check or reason to suspect wrongdoing.
The majority states that “the policy of preventing future harm and the burden to the defendant and consequences to the community do not weigh in favor of imposing a duty of inquiry in this case.” (Maj. opn., ante, at p. 489.) Except for the burden to defendant, discussed in text, I do not understand and the majority does not explain how or why these other factors fail to militate in favor of imposing a duty. Certainly public policy favors discouraging conduct *503that facilitates the commission of fraud, and the community suffers to the extent that embezzlement is permitted to succeed.
A similar duty is likely cognizable in actions against nonbank entities in New York. (See Rochester & C.T.R. Co. v. Paviour (1900) 164 N.Y. 281 [58 N.E. 114] [employer has action against individual who accepted company check from employee for unauthorized payment of employee’s personal debt]; Munn v. Boasberg (1944) 292 N.Y. 5, 8-9 [53 N.E.2d 371] [individual defendant has duty to make inquiry of plaintiff before accepting funds where plaintiff’s check is offered in payment of a third party’s debt to him, and where the check gave no indication why either the individual or the third party had any right to the check proceeds]; Shapiro v. McNeill (1998) 92 N.Y.2d 91, 98-99 [677 N.Y.S.2d 48, 699 N.E.2d 407] [“Assuming, without deciding, that those few cases . . . where this Court has imposed a similar, strict duty of inquiry on a nonbank payee, are still good law after our decision in Hartford [Acci. & Indem. Co. v. American Express Co., supra, 74 N.Y.2d 153], such cases are distinguishable” on the ground that in this case “there were neither circumstances suggesting *504bad faith nor the total absence of any apparent authority on the face of the checks which would put [attorney, who accepted fraudulent checks] on notice of an irregularity possibly triggering a duty to inquire”].)