Topic: Remotely Created Checks (RCCs)
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We are considering offering an interest-bearing checking account that allows for transfers only to and from a business’s operating account. Check writing, ACH credits and debits, and bill pay will be prohibited. Is R20 the most appropriate ACH return code for outside transactions on this account, even though we would not place a limit on the number of internal transactions between the customer’s accounts? What FRB check return code should we use if external paper checks or remotely created checks are presented for payment?
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Yes, we believe the ACH return code R20 is the most appropriate for an external transfer to or from an account that prohibits external transfers. R20 is the designated ACH return code for payments sent to non-transaction accounts as defined in Regulation D, which includes “an account against which transactions are prohibited or limited.” Even…
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We have a business customer that acts as a payment processor for other companies. They create remotely created checks and deposit them with our bank via remote deposit capture at their place of business. Recently, the number of returned items has increased massively, and we wish to terminate the relationship. We would like to determine the best time to terminate the relationship. What are the timeframes in which we would be liable as the depositing bank for returns through cash letters, adjustments with entry, and incoming collection claims without entry?
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In our view, your bank could be liable for unauthorized remotely-created checks (RCCs) for at least one year from the date of the account closing (or freezing). If your bank terminated or froze the customer’s account today, paying banks would have one year from today to bring claims for violations of the RCC warranties in…
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What is the procedure to return an unauthorized remotely created check (RCC) drawn on a business customer’s account that is processed through the check collection system as a substitute check (not as an ACH transaction)? What return code should we use? Should we have the customer sign an affidavit? Do Rule 8 and Rule 9 apply to us?
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The procedure for returning an RCC processed through the check collection system is no different than for returning any other unauthorized check. If you discover that an RCC was unauthorized before the midnight deadline has passed (midnight on the next banking day following the banking day on which the check is presented), your bank may…
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One of our customers just notified us that several counterfeit checks have been drawn on her checking account, starting over six months ago, with the most recent check paid about a month ago. We have copies of the checks, which state “signature not required” and that “customer authorization was obtained using Quick Pay Office Pro.” Are we liable for paying these checks? Our account agreement requires customers to report unauthorized checks within 60 days.
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Based on the facts provided, we believe these checks are remotely created checks (defined in Regulation CC as a check “that does not bear a signature applied, or purported to be applied, by the person on whose account the check is drawn”). We do not believe that your bank should be liable for the unauthorized…