No, a depository bank is not required to send an image replacement document (also known as a substitute check) to its customers as part of the chargeback notice.

Regulation CC provides that if a depository bank receives a returned check, “it shall send or give notice to its customer of the facts,” but it does not require the depository bank to include the returned check or substitute check with the notice. Similarly, the Uniform Commercial Code’s return requirements provide that the depository bank must either send notification of the facts or send the item itself.

The FFIEC’s guidance on the Check Clearing for the 21st Century Act (which is implemented by Regulation CC) provides an example of the substitute check clearing process that involves the depository bank providing a copy of the substitute check with the chargeback notice when there are insufficient funds to cover the substitute check. While this may be a best practice, we do not believe it is required.

For resources related to our guidance, please see:

• FFIEC, Consumer Compliance FAQ for Check Clearing for the 21st Century Act (Check 21) and the Implementing Regulation (12 CFR 229) (“What is the difference between an Image Replacement Document (IRD) and a substitute check? IRD is a technical term used by the banking industry in ANS X9.100-140 to refer to substitute checks. The term IRD formerly included other documents used to replace original checks, such as photocopies in lieu used when an original check was lost or destroyed, but ANS X9.100-140 was changed so that the term now only refers to substitute checks.”)

• Regulation CC, 12 CFR 229.33(h) (“Notification to customer. If the depositary bank receives a returned check, notice of nonpayment, or notice of recovery under §229.35(b), it shall send or give notice to its customer of the facts by midnight of the banking day following the banking day on which it received the returned check, notice of nonpayment, or notice of recovery, or within a longer reasonable time.”)

• Illinois UCC, 810 ILCS 5/4-214(a) (“If a collecting bank has made provisional settlement with its customer for an item and fails by reason of dishonor, suspension of payments by a bank, or otherwise to receive settlement for the item which is or becomes final, the bank may revoke the settlement given by it, charge back the amount of any credit given for the item to its customer’s account, or obtain refund from its customer, whether or not it is able to return the item, if by its midnight deadline or within a longer reasonable time after it learns the facts it returns the item or sends notification of the facts. If the return or notice is delayed beyond the bank's midnight deadline or a longer reasonable time after it learns the facts, the bank may revoke the settlement, charge back the credit, or obtain refund from its customer, but is liable for any loss resulting from the delay. These rights to revoke, charge back, and obtain refund terminate if and when a settlement for the item received by the bank is or becomes final.”)

• Illinois UCC, 810 ILCS 5/4-214(b) (“A collecting bank returns an item when it is sent or delivered to the bank's customer or transferor or pursuant to its instructions.”)

• FFIEC, Check Clearing for the 21st Century Act Foundation for Check 21 Compliance Training (“If there had been insufficient funds to cover this substitute check, the paying bank could return it stamped NSF to Bank 1, the Bank of First Deposit. Regulation CC requires the reason for return to be stamped on the portion of the substitute check that contains the image of the original check. Bank 1 could then charge its customer’s account for the returned item and provide the substitute check with the chargeback notice.”)