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Reg CC Changes & Remotely Created Checks
John Burnett, BOL Guru
Guru Bios
Question: In the amendments to Reg CC relating to remotely created checks how can a depositing bank "shift" its liability to the person depositing the remotely created checks? Do I need a specific agreement with the account holder?
Answer: As you have correctly figured out, the Reg CC warranties are only made by the banks in the collection process. That makes sense, because the regulation controls banks, not their depositors.
You will need to have something in your deposit agreement that allows you to charge back to your depositor any remotely-created check (that will beg for a definition in your agreement) that is returned to you (the bank) under a warranty claim pursuant to subsection 229.34(d) of Reg CC. Although I believe that the amendment will help to root out a lot of the fraudulent activity in these items, you will also need to have a way to refuse to accept these items for deposit if you believe your customer is using them fraudulently. That presupposes that you'll want to know your customers (there's that phrase again!) and their deposits.
First published on BankersOnline.com 5/15/06
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