Return of Unauthorized Paper Debit
Answer by John Burnett, BOL Guru Guru Bio
Question: We have a commercial customer who had a paper debit posted to his checking account. After he got his statement, he informed us that he did not authorize that debit. We tried to return it as unauthorized (about 30 days later), but the bank on the other end refused to take it back. Do we have any recourse at all?
Answer: Yes. Use a different route. You passed the midnight deadline for conventional returns; that is why the depositary bank refused the charge-back.
If the item conforms to the Regulation CC definition of a remotely-created check (see subsection 229.2(fff)), you can make a warranty claim against the depositary bank if your customer provides you with a required statement under oath. If you received the item from the Fed, you can use the Fed's Check Adjustments service within 90 days of the date of the item's cash letter presentment to you. The Fed's Check Adjustments Quick Reference Guide has details about what has to be included in the customer's statement, and how to file the claim. Your bank will get credit within a day.
If you are unable to file the claim using the Fed's Adjustment Service because the item was not handled by the Fed or because more than 90 days have passed, you may still be able to enter your claim directly (without entry) with the depositary bank. The warranty is one made by the depositary bank under subsection 229.34(d) of Regulation CC, and it is available regardless of the type of customer (consumer/business/other).
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