Question of the Day Flashcards

Question

What regulation defines electronic checks and electronic returned checks in the U.S.?

Answer 1

Regulation CC ## Footnote Regulation CC defines the terms but defers to agreements for the specifics of exchanges.

Answer 2

The FRB is a party to sending and receiving items and establishes rules for exchanges ## Footnote This includes Operating Circular 3 (OC 3) and incorporates federal and state regulations.

Answer 3

Handling of all cash items accepted for forward collection and all returned checks accepted for return by the FRB ## Footnote OC 3 incorporates federal and state regulations regarding check payments.

Answer 4

ECCHO Operating Rules and Commentary ## Footnote These rules apply to the exchange of electronic checks and electronic returned checks between ECCHO members.

Answer 5

No, it is voluntary ## Footnote However, once agreed, members must conform to the rules provisions.

Answer 6

Unique rules governing exchanges between two or more parties ## Footnote Agreements must outline specific areas of interest related to that exchange.

Answer 7

The agreement must be re-negotiated ## Footnote This ensures that specific areas of interest are addressed for the new relationship.

Answer 8

FRB Rules ## Footnote This includes compliance with Operating Circular 3 and other applicable regulations.

Answer 9

False ## Footnote ECCHO facilitates the rules but does not engage directly in exchanges.

Answer 10

Federal and state regulations (Regulation CC and UCC) ## Footnote These regulations pertain to check payments.

Answer 11

closed ## Footnote This includes items in the amount of $100,000,000 or more.

Answer 12

False ## Footnote A check must not consist of more than a single thickness of paper or be physically damaged to qualify as a cash item.

Answer 13

Electronic checks must conform to OC 3 requirements and technical requirements of the FRB ## Footnote They must also be derived from a paper check as defined in Regulation CC.

Answer 14

$100,000,000 ## Footnote This is to prevent evasion of the established threshold.

Answer 15

Generally, the words pay any bank (or the like) make a bank indorsement a restrictive indorsement. ## Footnote UCC §4-201 outlines that a collecting bank acts as an agent for the item's owner.

Answer 16

The collecting bank plays the role of agent (or sub-agent) for the item’s owner ## Footnote This role is maintained regardless of the form of indorsement.

Answer 17

Only a bank may acquire the rights of a holder until the item has been either: * Returned to the customer who initiated collection * Specially indorsed by a bank to a person who is not a bank ## Footnote This establishes a restrictive indorsement limiting further rights.

Answer 18

It protects the rights of a customer depositing a check in a bank without requiring the words 'pay any bank'

Answer 19

It makes it more difficult for other banks to identify the depositary bank ## Footnote An applicable industry standard prohibits such material in subsequent collecting bank indorsements.

Answer 20

Indorsement requirements for banks handling checks during forward collection or return ## Footnote This regulation specifies how banks must indorse checks for clear interpretation.

Answer 21

The bank must indorse the check in a manner that permits interpretation according to ANS specifications ## Footnote This applies to both physical checks and electronic check images.

Answer 22

ANS X9.100-111 ## Footnote This standard is for all physical check endorsements except substitute checks.

Answer 23

ANS X9.100-140 ## Footnote This specification is for an Image Replacement Document (IRD).

Answer 24

ANS X9.100-187 ## Footnote This standard pertains to the electronic exchange of check and image data domestically.

Answer 25

Two business days

Answer 26

Deposited cash and electronic payments

Answer 27

Subject to normal availability rules

Answer 28

returned due to missing indorsement or postdating

Answer 29

Negative for six or more banking days or two or more days with amounts of $5,525 or more in the previous six months

Answer 30

Applies only to cash, electronic payments, and the first $5,525 of other next-day items

Answer 31

By the 9th business day

Answer 32

The check must be deposited into an account held by a payee of the check, may be required to be deposited in person to an employee of the depositary bank, and with a special deposit slip if required by the depositary bank.

Answer 33

[payee of the check]

Answer 34

A special deposit slip

Answer 35

[depositary bank]

Answer 36

Items the bank has declined to pay two or more times ## Footnote This includes a limit of one presentment and one re-presentment via the FRB.

Answer 37

An item that includes a MICR line with a retired routing number ## Footnote Retired routing numbers are no longer valid for processing transactions.

Answer 38

Passbook, certificate or other document attached to the item ## Footnote Such attachments complicate the processing of the item.

Answer 39

A request for special advice of payment or dishonor ## Footnote Special instructions may require additional handling that the FRB does not accommodate.

Answer 40

Item consists of more than a single thickness of paper ## Footnote This can complicate the handling and processing of the item.

Answer 41

By midnight of the banking day following dishonor

Answer 42

Entitled to a refund if identified within bank's deadline and bank cannot verify authorization ## Footnote Valid reason for claims: Drawer did not authorize the check. Invalid reasons include oral authorization or buyer's remorse.

Answer 43

Drawer did not authorize the check ## Footnote This indicates the consumer did not give permission for the transaction.

Answer 44

Oral authorization obtained and recorded, buyer's remorse ## Footnote These reasons do not support a claim for refund as they indicate some level of authorization or regret.

Answer 45

May return the check ## Footnote This is in accordance with UCC §4-301 which outlines the timeline for returning unauthorized checks.

Answer 46

Submit a breach of warranty claim ## Footnote This allows the bank to seek compensation for the unauthorized transaction despite missing the return deadline.

Answer 47

Transfer and presentment warranties for remotely created checks ## Footnote It ensures the bank warrants that the person on the account authorized the check issuance.

Answer 48

The account holder authorized the issuance of the check ## Footnote This warranty is crucial for ensuring the legitimacy of the transaction.

Answer 49

deadline for statement examination

Answer 50

A customer must discover and report unauthorized signature or altered items per UCC §4-406 ## Footnote UCC §4-406 outlines the duties of customers regarding unauthorized items.

Answer 51

The bank must send either the item or information sufficient to identify the item (check number, amount, and date paid) ## Footnote This is part of the bank's obligation under UCC §4-406.

Answer 52

The customer has a duty to examine the statement with reasonable promptness ## Footnote This includes checking for unauthorized signatures or alterations.

Answer 53

An unauthorized signature includes forgery or an agent acting outside the scope of authority ## Footnote This definition is relevant for identifying unauthorized payments.

Answer 54

The customer must notify the bank within a reasonable time after the statement or items were made available ## Footnote The specific duration for 'reasonable time' is not defined in UCC.

Answer 55

No specific definition of reasonable promptness is provided in UCC ## Footnote Case law in various states may address this.

Answer 56

The customer is precluded from asserting unauthorized signature or alteration against the bank if the bank proves a loss due to this failure ## Footnote This is outlined in §4-406 (d).

Answer 57

The 30-day period applies to repeated check fraud by the same wrongdoer ## Footnote It allows customers to examine items or statements before notifying the bank.

Answer 58

A customer must discover and report unauthorized signature or alteration within one year after items are made available ## Footnote Failure to do so precludes the customer from asserting claims against the bank.

Answer 59

False ## Footnote UCC does not specify a defined timeframe for reporting; it mentions 'reasonable promptness'.

Answer 60

The party presenting the altered item generally has the liability. ## Footnote This depends on the facts and circumstances of each case.

Answer 61

Presenting an altered item constitutes a breach of the depositary bank warranty. ## Footnote Each person or bank that transfers the check or presents it for payment warrants the item is not altered.

Answer 62

The bank may make a breach of warranty claim to recover. ## Footnote This is a legal recourse available to the bank when an alteration is found.

Answer 63

The paying bank (drawee) has the liability for paying the unauthorized item. ## Footnote This is based on the law of Price v. Neal, as embodied in the UCC.

Answer 64

Paying a forged/counterfeit item that is presented is a breach of the UCC provisions. ## Footnote UCC provisions permit a paying bank to pay items that are properly payable (items authorized by the accountholder).

Answer 65

The paying bank must detect and return forged/counterfeit items by required return deadlines. ## Footnote Failure to do so would be considered a late return.

Answer 66

Rule 9 warranties are made directly by an ECCHO member that is a depositary bank to another ECCHO member that is a paying bank. ## Footnote This applies if both members have not opted out of Rule 9.

Answer 67

ECCHO Operating Rules XIX (O) outlines the Forged and Counterfeit Check Warranties. ## Footnote This document provides specific guidance on warranties related to forged and counterfeit checks.

Answer 68

Standard Entry Codes (ARD, POP, BOC)

Answer 69

Bank Secrecy Act

Answer 70

The person in possession of a negotiable instrument that is: * Payable either to bearer or * Payable to an identified person that is the person in possession ## Footnote None

Answer 71

A holder who has possession of the check and took the check: * In good faith, * For value, * Without notice it was overdue or dishonored * Without notice the signature was unauthorized or altered * Without knowledge of other claims against it ## Footnote None

Answer 72

Can enforce the check against the drawer even if the check was returned unpaid by the drawee ## Footnote The drawee refers to the bank or entity responsible for paying the check.

Answer 73

Through negotiation: * For bearer instruments, the holder must have the instrument in their possession * For identified instruments, the holder must be identified on the instrument and must have the instrument in their possession ## Footnote Negotiation refers to the transfer of possession of the instrument.

Answer 74

The holder must: * Have possession of the instrument * Have given value in exchange for the instrument * Meet all the required conditions listed previously ## Footnote These conditions ensure the protection of the holder in due course.

Answer 75

An item may be presented no more than two times (original presentment and 1 re-presentment) ## Footnote An item that has been presented a second time, if rejected, cannot be re-presented through the FRB.

Answer 76

An item may be presented no more than three times (original presentment and up to 2 re-presentments) ## Footnote This allows for one original presentment and two additional attempts.

Answer 77

It becomes a non-cash item. ## Footnote This indicates that the item can no longer be processed as a cash item.

Answer 78

The clearing path (exchange) determines the number of times an item can be presented. ## Footnote Different clearing paths have different rules regarding item presentation.

Answer 79

Nacha Operating Rules and Guidelines ## Footnote These rules provide the legal framework for moving transactions through the ACH system.

Answer 80

* Warranties and responsibilities of participants * Availability of funds for converted check transactions * Return timeframes for converted check transactions ## Footnote These provisions ensure proper handling of transactions within the ACH system.

Answer 81

Consumers whose accounts are debited or credited via ACH ## Footnote Specifically for transactions initiated through an electronic terminal or telephone.

Answer 82

* Accounts Receivable Entry (ARC) * Point-of-Purchase Entry (POP) * Back Office Conversion Entry (BOC) ## Footnote These codes are used for converting checks to ACH transactions.

Answer 83

* Reg CC * UCC * ACH Rules ## Footnote RCK transactions are treated as check transactions even though they are processed as ACH transactions.

Answer 84

False ## Footnote Regulation E does not apply to RCK transactions.

Answer 85

[check conversion SEC Codes] ## Footnote Examples include ARC, POP, and BOC.

Answer 86

Originated as a check, dishonored, and re-presented via ACH network ## Footnote RCK transactions continue to be treated as check transactions.

Answer 87

A consumer must report an unauthorized electronic fund transfer within 60 days from when the account’s periodic statement is made available to the customer to avoid liability for subsequent transfers. ## Footnote This regulation is outlined in Reg E §1005.6.

Answer 88

The consumer may be entitled to a refund if the bank cannot verify authorization of the charge. ## Footnote Valid reason for claims: Drawer did not authorize the check. Invalid reasons include oral authorization obtained and recorded, or buyer's remorse.

Answer 89

Drawer did not authorize the check. ## Footnote This is considered a valid basis for consumers to seek a refund.

Answer 90

Invalid reasons include: * Oral authorization obtained and recorded, but the drawer forgot about it * Charge was authorized, and depositor is now experiencing 'buyer's remorse' ## Footnote These reasons do not support a claim for a refund.

Answer 91

The paying bank may return the RCC. ## Footnote Refer to UCC §4-301 for details.

Answer 92

Submit a breach of warranty claim. ## Footnote This is the recourse available after the midnight deadline has passed.

Answer 93

It provides transfer and presentment warranties. ## Footnote The bank warrants that the person on whose account the check is drawn authorized its issuance.

Answer 94

The bank warrants that the person on whose account the check is drawn authorized the issuance of the check in the amount stated on the check and to the payee stated on the check. ## Footnote This warranty is to the transferee bank, any subsequent collecting bank, and the paying bank.

Answer 95

Reg CC §229.34 (f) ## Footnote Reg CC refers to the Regulation CC, which governs the availability of funds and the collection of checks.

Answer 96

It must be a truncating bank that accepts deposits of electronic images or other electronic information related to an original check. ## Footnote A truncating bank is one that processes checks in electronic form rather than as physical checks.

Answer 97

The original check. ## Footnote This condition is crucial as it differentiates the handling of electronic checks from traditional checks.

Answer 98

Settlement or other consideration for an electronic check or substitute check related to the original check. ## Footnote Settlement refers to the payment received for the processing of the electronic check.

Answer 99

It must not receive a return of the check unpaid. ## Footnote This means that the bank should not have to return the check because it could not be processed successfully.

Answer 100

If the depositary bank accepts the original check for deposit with a restrictive indorsement inconsistent with the means of deposit. ## Footnote Example: A restrictive indorsement stating 'For mobile deposit only at Bank ABC' when deposited at another bank.

Answer 101

A depositary bank that: * Is a truncating bank * Does not receive the original check * Receives settlement for an electronic check or substitute check * Does not receive a return of the check unpaid Shall indemnify a depositary bank that: * Accepts the original check for deposit * Receives a return or adjustment of the duplicate item * Incurs a loss due to the check having already been paid. ## Footnote This includes scenarios involving electronic images or information related to checks.

Answer 102

A bank that accepts deposit of an electronic image or other electronic information related to an original check. ## Footnote Truncating banks facilitate electronic processing of checks.

Answer 103

duplicate item

Answer 104

Reg CC §229.34(f) ## Footnote This section includes commentary and examples relevant to RDC Indemnity.

Answer 105

It can seek indemnity from the bank that accepted the original check for deposit. ## Footnote This is contingent on the depositary bank not having received the original check.

Answer 106

The party presenting the altered check generally has the liability ## Footnote This is due to the breach of the depositary bank warranty, which requires that the item is not altered.

Answer 107

It would be a breach of the depositary bank warranty ## Footnote Each person or bank transferring or presenting the check warrants that it is not altered.

Answer 108

The bank may make a breach of warranty claim to recover ## Footnote This is based on the warranty that the item is not altered.

Answer 109

The paying bank (drawee) generally has the liability ## Footnote This is based on the law of Price v. Neal, where the paying bank knows the customer's signature.

Answer 110

It is a breach of the UCC provisions that allow payment of items that are properly payable ## Footnote Items must be authorized by the accountholder.

Answer 111

The paying bank must return these items by required return deadlines ## Footnote Failing to do so would be considered a late return.

Answer 112

Warranties made directly by an ECCHO member that is a depositary bank to another ECCHO member that is a paying bank ## Footnote This applies if both members have not opted out of Rule 9.

Answer 113

Provisions that the item/draft is not altered ## Footnote This includes various sections such as §3-416 and §4-207 for transfer warranties, and §3-417 and §4-208 for presentment warranties.

Answer 114

[properly payable item] ## Footnote A properly payable item is one that is authorized by the accountholder.

Answer 115

Rule 9 is the commonly used name for special warranty under the ECCHO Rules Section XIX(O) related to forged/counterfeit checks.

Answer 116

An ECCHO member that is a depositary bank makes warranties to another ECCHO member that is a paying bank.

Answer 117

Rule 9 warranties are interbank warranties.

Answer 118

Both members must not have opted out of Rule 9.

Answer 119

A paying bank may have a Rule 9 warranty claim if an electronic check is derived from a paper check that bears a forged or unauthorized drawer’s signature or that is counterfeit.

Answer 120

* The signature of the purported drawer of the paper check was not forged or otherwise unauthorized. * The paper check was not counterfeit.

Answer 121

Various timing considerations must be met.

Answer 122

The paying bank may choose not to pay the check before the future date. ## Footnote Refer to UCC §4-401(c) for legal context.

Answer 123

A check written and transferred on the current date but shows a future date on the check. ## Footnote This means the check cannot be cashed until the future date specified.

Answer 124

Charge against the account a post-dated check that is otherwise properly payable. ## Footnote Customers must inform the bank of the postdating to prevent this.

Answer 125

'H' – date on the item is in the future. ## Footnote Refer to ANS X9.100-188 for details on return reasons for check image exchange.

Answer 126

Post-dated checks presented for payment may be paid by the bank and charged to the customer’s account even if presented before the date stated on the check. ## Footnote This is outlined in UCC §4-401.

Answer 127

When the payor bank returns a presented item by its midnight deadline either without paying or accepting the check, or sends a timely notice of dishonor or non-payment.

Answer 128

When the payor bank dishonors either a properly payable item or an item that would create an overdraft and the bank had agreed to pay the overdraft.

Answer 129

At any time between the time the item is received by the payor bank and the time the payor bank returns the item or gives notice in lieu of return.

Answer 130

[returned or gives notice in lieu of return]

Answer 131

The account balance at that time.

Answer 132

A paying bank returns a check expeditiously if it sends the returned check in a manner such that the check would normally be received by the depositary bank not later than 2:00 p.m. on the second business day following the banking day on which the check was presented to the paying bank.

Answer 133

Not later than 2:00 p.m. local time of the depositary bank on the second business day following the banking day on which the check was presented.

Answer 134

It must provide notice of nonpayment such that notice would normally be received by the depositary bank not later than 2:00 p.m. local time on the second business day following the banking day on which the check was presented.

Answer 135

Notice may be provided by any reasonable means, including the returned check.

Answer 136

Regulation CC §229.31

Answer 137

* U.S. Treasury Checks * USPS money orders * Government checks that is not payable through or at a bank ## Footnote These exclusions apply to the notice of nonpayment and same day settlement requirements.

Answer 138

Meet both return timings: UCC requirement and Regulation CC requirement ## Footnote UCC stands for Uniform Commercial Code and Regulation CC pertains to the expeditious handling of returned items.

Answer 139

Midnight on its next banking day following the banking day on which it received the relevant item ## Footnote This means the paying bank has until the end of the next banking day to return the item.

Answer 140

Yes, a paying bank may return the item before it has made final payment ## Footnote This allows banks to manage risks associated with items that may not be honored.

Answer 141

* Returns the item * Returns an image of the item by agreement * Provides notice of dishonor or nonpayment if the item is unavailable for return ## Footnote Returning an image is contingent on prior agreement and must adhere to that agreement.

Answer 142

Return the item in an expeditious manner ## Footnote This regulation aims to ensure timely processing of returned checks.

Answer 143

The return item - one record for each return ## Footnote Type 31 contains specific details about the return of a check.

Answer 144

Contains MICR line information, ECE Item Sequence Number, current return reason code, and other indicators for processing ## Footnote This information is crucial for understanding the context of the check return.

Answer 145

Corresponds to the associated Check Detail (Type 25) record ## Footnote This relationship is important for tracking the details of the check.

Answer 146

MICR Auxiliary On-Us field ## Footnote This field can be found in Record Type 33.

Answer 147

Associated with Return Record (Type 31) ## Footnote It mirrors Check Detail Addendum A Record (Type 26) which identifies return location for customer returns.

Answer 148

* Return location routing number * Item sequence number (if present) * Item business date ## Footnote These fields help in identifying specific details related to customer returns.

Answer 149

True ## Footnote This means that if there are several Check Detail Addendum A Records, corresponding Type 32 records will be generated.

Answer 150

[Check Detail Addendum A Record (Type 26)] ## Footnote This mirroring is important for maintaining consistency in return location identification.

Answer 151

It is associated with Return Record (Type 31) ## Footnote This record provides additional information related to the return of a check.

Answer 152

When the item has MICR Auxiliary On-Us field found in Check Detail Record (Type 25) on forward collection file ## Footnote This indicates that specific details about the check are included in the record.

Answer 153

Return Record (Type 31) ## Footnote This association is crucial for tracking and processing returned checks.

Answer 154

False ## Footnote It is specifically tied to a Return Record (Type 31).

Answer 155

Return Record (Type 31) ## Footnote The Return Addendum D Record (Type 35) is linked to the Return Record (Type 31).

Answer 156

Check Detail Addendum C Record (Type 28) ## Footnote It identifies information for each subsequent endorsing institution.

Answer 157

Return reason code ## Footnote This code explains the reason for the return of the transaction.

Answer 158

False ## Footnote The Return Addendum D Record is specifically associated with the Return Record.

Answer 159

MICR line information, ECE Item Sequence Number, and processing indicators ## Footnote The item contains one record for each check.

Answer 160

Aux-on us field ## Footnote This field is used for additional processing information.

Answer 161

True ## Footnote Each check has a corresponding record in the Check Detail Record.

Answer 162

Check Detail Record (Type 25) ## Footnote This number is crucial for tracking and processing checks.

Answer 163

To provide processing information for checks ## Footnote It helps in the efficient handling and tracking of check transactions.

Answer 164

An addendum record associated with a previous Check Detail Record (Type 25) ## Footnote It typically includes important information related to check processing.

Answer 165

The Bank of First Deposit (BOFD) indorsement record ## Footnote It may also include a specific Return Location.

Answer 166

The routing number of the item as the return location ## Footnote This routing number is crucial for identifying the bank involved.

Answer 167

Multiple presentments of an item ## Footnote This can occur when a check is presented more than once for payment.

Answer 168

Contains indorsement information and return reasons for items ## Footnote Typically referred to as Subsequent Indorsement record

Answer 169

Check Detail Record (Type 25) ## Footnote Type 28 is typically a follow-up to Type 25

Answer 170

Identifies itself and retains previous indorsement records ## Footnote Each subsequent bank adds its own Type 28 record

Answer 171

Depositary bank's indorsement with an indicator ## Footnote This indicates the agreement for returns processing

Answer 172

One Type 26 or Type 28 record ## Footnote This ensures compliance with imaging requirements

Answer 173

Multiple presentments and multiple subsequent indorsements ## Footnote Each scenario may lead to additional records being created

Answer 174

Type 31, Type 32, Type 33, and Type 35 records ## Footnote These correspond to Type 25, Type 26, and Type 28 records

Answer 175

Header Records must have a corresponding Control Record ## Footnote Examples include File Header Record (Type 01) paired with File Control Record (Type 99), Cash Letter Header Record (Type 10) with Cash Letter Control Record (Type 90), and Bundle Header Record (Type 20) with Bundle Control Record (Type 70)

Answer 176

Item Counts or Dollar Amounts must balance ## Footnote If they fail to balance, it leads to processing issues

Answer 177

[addendum records included]

Answer 178

Failure to meet processing requirements ## Footnote This indicates a processing error that may lead to item level rejects.

Answer 179

At least one Type 26 or Type 28 Addendum record ## Footnote This ensures that the Check Detail Record is properly validated.

Answer 180

At least one Type 32 and one Type 35 Addendum record ## Footnote This is necessary for the Return Record to be processed correctly.

Answer 181

It has a defined value of 'E' (Administrative Returns) ## Footnote This may lead to exceptions in the validation requirements for Return Records.

Answer 182

ECCHO Rules allow the sending bank to determine a time period for retention based on internal bank policy ## Footnote Refers retention of the electronic image and associated data to applicable law.

Answer 183

No, FRB OC 3 does not establish a document retention requirement ## Footnote It does not specify any retention for associated electronic images and item data.

Answer 184

UCC §4-406 outlines that items must be retained or maintain the capacity to furnish legible copies for seven years after receipt ## Footnote Adoption of UCC may vary by state and impose different retention periods.

Answer 185

The Check 21 Act allows a substitute check to be the legal equivalent of the original check for all purposes ## Footnote This includes adherence to any state or federal law provisions.

Answer 186

A party must retain the images and all associated data for 7 years ## Footnote This is a requirement under the Check 21 Act.

Answer 187

seven years after the receipt of the items

Answer 188

False ## Footnote It does not impose unique retention requirements but recognizes the legal equivalence of substitute checks.

Answer 189

To promote uniformity in the supervision of financial institutions. ## Footnote The FFIEC is a formal interagency body that makes recommendations for financial institution supervision.

Answer 190

Uniform principles, standards, and report forms for the federal examination of financial institutions. ## Footnote This includes guidance administered via bank regulatory examination.

Answer 191

No. ## Footnote The FFIEC provides guidance but does not constitute regulation.

Answer 192

State banking departments. ## Footnote They may use the guidance when imposing requirements.

Answer 193

* Board of Governors of the Federal Reserve System * Federal Deposit Insurance Corporation (FDIC) * National Credit Union Administration (NCUA) * Office of the Comptroller of the Currency (OCC) * Consumer Financial Protection Bureau (CFPB) ## Footnote These agencies support the FFIEC's functions.

Answer 194

The State Liaison Committee (SLC) as a voting member. ## Footnote The SLC includes representatives from various state supervisory organizations.

Answer 195

* Conference of State Bank Supervisors (CSBS) * American Council of State Savings Supervisors (ACSSS) * National Association of State Credit Union Supervisors (NASCUS) ## Footnote These organizations provide state-level representation within the FFIEC.

Answer 196

To promote an efficient nationwide payments system. ## Footnote This mandate is given by Congress.

Answer 197

* Revamped the check-return system * Improved presentment rights of private-sector banks * Established rules governing funds availability * Supported Check 21 to Congress ## Footnote Check 21 allows for substitute checks, facilitating technology advancements.

Answer 198

To enable substitute checks that speed check collection and reduce processing costs. ## Footnote It supports technology improvements in the payments system.

Answer 199

* Maintain accounts * Collect checks and settle interbank payments * Electronically transfer funds * Distribute and receive currency and coin ## Footnote These services meet the public's demand for money.

Answer 200

* Act as fiscal agents * Pay Treasury checks * Process electronic payments * Issue, transfer, and redeem U.S. government securities ## Footnote This includes a variety of financial services to support government operations.

Answer 201

The Gold Book is a check reclamation guide used by the Bureau of the Fiscal Service to obtain refunds from a presenting financial institution for paid U.S. Treasury checks ## Footnote It provides procedures and regulations related to check reclamation.

Answer 202

Reclamation of amounts of paid checks ## Footnote This regulation outlines the legal framework for reclaiming funds from financial institutions.

Answer 203

Reclamation procedures; reclamation protests ## Footnote This regulation details the processes involved in handling reclamations and disputes.

Answer 204

When a check was presented for payment over a forged or unauthorized endorsement ## Footnote This is one of the critical conditions that warrant a reclamation action.

Answer 205

When a benefit check was negotiated after the payee’s death ## Footnote This condition indicates a significant legal breach in the negotiation of checks.

Answer 206

When a check was materially altered ## Footnote Material alteration refers to any significant change to the check that affects its validity.

Answer 207

The receiving bank handles ineligible items in accordance with agreements, procedures, applicable laws, and practices developed with the sending bank. ## Footnote This includes UCC midnight deadline and Reg CC expeditious return.

Answer 208

* UCC midnight deadline * Reg CC expeditious return

Answer 209

* Return image cash letter (ICLR) with administrative reason code * FRB chargebacks * Manual processes such as secure email or fax * Any other processes outlined in the agreement between the sending and receiving banks

Answer 210

* Poor quality image * Ineligible item * Missing image * Codeline mismatch * Any others included in the agreement between the sending and receiving banks

Answer 211

Check security features designed to help reduce check fraud that do not become disabled during the imaging process.

Answer 212

Security features that remain effective during the imaging process.

Answer 213

* Chemical & thermal sensitive paper * Paper printed with watermarks, embossing, or foils * Holograms * Paper with 'original document' or other screens on the back of check * 'VOID' or other pantographs designed to appear on a photocopy

Answer 214

* Bar-coding * Seal-encoding * Digital watermarks

Answer 215

To encrypt check payment data into a printed security mark on the check.

Answer 216

* Payee * Check number * Account number * Amount

Answer 217

Special software is needed to decode the security mark.

Answer 218

When payment data is known at the time of printing, such as corporate account checks.

Answer 219

Each bank that transfers or presents an electronically-created item must indemnify certain parties against losses ## Footnote Parties include transferee banks, subsequent collecting banks, paying banks, and subsequent returning banks.

Answer 220

Indemnity covers losses resulting from: * Electronic image or information not derived from a paper check * Unauthorized issuance of the item by the account holder * Receipt of a transfer or presentment for an ECI that has already been paid

Answer 221

paper check

Answer 222

Transferee banks, subsequent collecting banks, paying banks, subsequent returning banks ## Footnote These parties are protected against specific losses related to electronically-created items.

Answer 223

They must have authorized the issuance of the item in the stated amount and to the stated payee ## Footnote The definition of 'account' includes various arrangements allowing check payments.

Answer 224

already paid

Answer 225

No, ECIs are not eligible for exchange based on provisions in the ECCHO Operating Rules or the FRB OC 3.

Answer 226

Both rule sets rely on the definitions in Reg CC.

Answer 227

An electronic check means an electronic image of, and electronic information derived from, a paper check that: * Is sent to a receiving bank pursuant to an agreement between the sender and the receiving bank * Conforms with ANS X9.100-187, unless a different standard applies.

Answer 228

An electronically-created item means an electronic image that has all the attributes of an electronic check but was created electronically and not derived from a paper check.

Answer 229

paper check

Answer 230

Items described in Section XIX(C) for Electronic Checks and Section XX(C) for Electronic Returned Checks ## Footnote Specific details about what constitutes eligible items can be referenced in the respective sections of the ECCHO Operating Rules.

Answer 231

An image of an item that is a paper check as defined under Section §229.2(k) of Regulation CC ## Footnote This definition clarifies that only images of actual paper checks qualify for electronic exchange.

Answer 232

It must be derived from an Originally Received Item that is a paper check as defined under Section §229.2(k) of Regulation CC ## Footnote This means the returned electronic check must relate back to a valid paper check.

Answer 233

A cash item and a returned check but not an electronically-created item ## Footnote This distinction is important for understanding what items are processed under Regulation J and Regulation CC.

Answer 234

Electronic checks and electronic returned checks that conform to the requirements of this circular and the technical requirements of the FRB ## Footnote Compliance with these requirements is necessary for successful processing.

Answer 235

paper check ## Footnote This emphasizes the requirement that the original item must be a paper check.

Answer 236

False ## Footnote The definition explicitly excludes electronically-created items from being classified as 'Items'.

Answer 237

No. ## Footnote ECIs are not considered checks or electronic checks as per Reg CC §229.30.

Answer 238

They are subject to Subpart C as if they were checks or returned checks, except where specified otherwise. ## Footnote This includes electronic checks and electronic returned checks.

Answer 239

It includes 'electronic check' or 'electronic returned check,' except where specified otherwise. ## Footnote This means that electronic versions are included unless specifically stated otherwise.

Answer 240

A paper check. ## Footnote This condition is crucial for the definitions in Reg CC.

Answer 241

An electronic image of, and electronic information derived from, a paper check. ## Footnote This definition also applies to electronic returned checks.

Answer 242

1. Sent to a receiving bank pursuant to an agreement 2. Conforms with ANS X9.100-187. ## Footnote A different standard may apply if determined by the Board or agreed upon by the parties.

Answer 243

An electronic image with attributes of an electronic check but created electronically, not derived from a paper check. ## Footnote This highlights the distinction between ECIs and electronic checks.

Answer 244

False. ## Footnote ECIs do not meet the requirements as they are not derived from paper checks.

Answer 245

ECI is an electronic image that has all the attributes of an electronic check or electronic returned check but was created electronically and not derived from a paper check ## Footnote ECI stands for Electronic Check Image.

Answer 246

To the return location as defined within Reg CC ## Footnote Reg CC refers to the Regulation CC under the Federal Reserve which governs the availability of funds and the collection of checks.

Answer 247

The reason for non-payment when an item is dishonored ## Footnote This code is communicated to the presenting bank.

Answer 248

Charged to a customer account ## Footnote This means that the amount of the returned item is deducted from the customer's account.

Answer 249

* NSF – Not Sufficient Funds * Stop Payment * Closed Account

Answer 250

The bank that presented the forward item ## Footnote May not be the return location as defined in Reg CC

Answer 251

An item returned for reasons other than a dishonored item

Answer 252

Internally by the presenting bank rather than being charged to a customer

Answer 253

* Image Missing * Ineligible item * Unusable image

Answer 254

ANS X9.100-188 standard

Answer 255

Clearly indicate on front of check that it is a returned check and a reason for return

Answer 256

Information from a substitute check or an electronic returned check

Answer 257

The no double-debit warranty is breached ## Footnote Additional breaches depend on the clearing path or channel.

Answer 258

Section XIX(L) ## Footnote This section provides guidance on warranties related to electronic checks.

Answer 259

No person will be charged for an electronic check if it has already been paid ## Footnote This includes the original check, substitute check, or any representation of a substitute check.

Answer 260

The sender warrants all warranties and indemnities set forth in Regulation CC Subparts C and D and UCC Article 4 ## Footnote This applies to items sent to or received from the Federal Reserve Bank (FRB).

Answer 261

The FRB warrants to subsequent collecting banks and paying banks all warranties and indemnities set forth in Regulation CC Subparts C and D and UCC Article 4 ## Footnote This ensures that all parties involved have the necessary indemnities.

Answer 262

Rule 9 is the commonly used name for special warranty under the ECCHO Rules Section XIX(O) related to forged/counterfeit checks ## Footnote Rule 9 addresses warranties made by depositary banks to paying banks regarding the authenticity of checks.

Answer 263

An ECCHO member that is a depositary bank makes warranties to another ECCHO member that is a paying bank if both have not opted out of Rule 9 ## Footnote Rule 9 warranties are interbank warranties applicable only between ECCHO members.

Answer 264

If an electronic check is derived from a paper check that bears a forged or unauthorized drawer’s signature or is counterfeit.

Answer 265

* The signature of the purported drawer of the paper check was not forged or unauthorized * The paper check was not counterfeit

Answer 266

Various timing considerations must be met.

Answer 267

The paying bank would be liable for a forged drawer’s signature or counterfeit item if not discovered and returned within required return deadlines.

Answer 268

It allows a paying bank to make a claim to the depositary bank after the drawer asserts that the item charged to their account is forged or counterfeit.

Answer 269

Section O of the ECCHO Rules.

Answer 270

[forged/counterfeit checks]

Answer 271

A uniform rule for disputes over imaged items when the original check is unavailable ## Footnote It addresses situations involving altered or counterfeit items.

Answer 272

When there is a dispute over whether an image was created from an altered or counterfeit item ## Footnote It applies to checks and electronic checks.

Answer 273

An evidentiary presumption of alteration when the check is truncated and destroyed or unavailable ## Footnote This occurs after creating and exchanging the image.

Answer 274

It applies to disputes over whether a substitute check or electronic check contains an alteration or is derived from an original check with an unauthorized signature ## Footnote This is relevant under Federal or State law.

Answer 275

By proving by a preponderance of evidence that the substitute check or electronic check does not contain an alteration ## Footnote Or that it is derived from an original check with an unauthorized signature.

Answer 276

The presumption of alteration no longer applies ## Footnote This applies to all banks involved in the dispute.

Answer 277

No, it does not alter those warranties ## Footnote The PoA is separate from UCC provisions.

Answer 278

To discover and report unauthorized signature or altered items.

Answer 279

Either the item or information in the statement sufficient to identify the item (check number, amount, date).

Answer 280

Examine it with reasonable promptness.

Answer 281

* Unauthorized signature (forgery or agent acting outside authority) * Alteration

Answer 282

Within a reasonable time from when the statement or items were made available.

Answer 283

No, UCC does not specify how many days constitutes reasonable promptness.

Answer 284

[alteration or unauthorized signature]

Answer 285

The customer is precluded from asserting against the bank the customer's unauthorized signature or any alteration on the item if the bank proves it suffered a loss due to the customer's failure to comply. ## Footnote The duties include examining items or statements in a timely manner.

Answer 286

The bank must prove that it suffered a loss by reason of the customer’s failure to comply and that the unauthorized signature or alteration was by the same wrongdoer on any other item paid in good faith before the bank received notice from the customer. ## Footnote This applies if the payment was made after the customer had a reasonable period of time, not exceeding 30 days, to examine the item or statement.

Answer 287

30 days. ## Footnote This period applies specifically to the repeat check fraud rule.

Answer 288

A customer who does not discover and report unauthorized signature or alteration within one year after the statement or items are made available is precluded from asserting against the bank. ## Footnote This section is known as the Statute of Repose.

Answer 289

It is the outside timing for a customer to file a claim after the bank has provided the item or statement to the customer. ## Footnote This period does not depend on the care or lack of care of either the customer or the bank.

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