For the Reg CC RDC indemnity, it states; "(2) A bank described in paragraph (f)(1) of this section shall indemnify, as set forth in § 229.34(i), a depositary bank that accepts the original check for deposit for losses incurred by that depositary bank if the loss is due to the check having already been paid."
We have a customer which is a business offering check cashing and it makes deposits via remote deposit capture. I am confused over the liability and timing of paper vs. electronic deposits, duplicate items and will restrictive endorsements influence liability?
Our digital channel team would greatly appreciate your comments and confirmation of our understanding in order to comply with online account opening and funding for new clients with ACH Debits and the ability to hold funds.
The questions below relate to an online account opening process for new clients. After completing the online application, approved clients have the option to fund their new account with funds from an external source – an account they hold at another bank - via an ACH Debit and we are the ODFI.
1. Can we place a hold on the initial funds received as an ACH Debit? Our understanding is “yes” because:
· an ACH debit does not fall under the definition of an electronic payment under Reg. CC (II.Section229.2 Definitions (p)) Electronic Payment, which imposes no availability requirement, and we are free to hold the funds for a period that we determine. Restricting access to those funds would be reasonable to allow for the debit entry to reach the RDFI and be returned to our bank, the ODFI, if there is a problem.
· We are not receiving an ACH credit as we are the ODFI of the ACH debit, and NACHA has no say in when we credit the new account, so there would be no violation of NACHA rules.</ul>
2. Would we be required to provide a hold notice to our online account applicant of the delay in availability or a notice at the time the external funding option is selected that the funds may not be credited to the account for “2-3 days”, or available for “2-3 days” suffice?
Our understanding is:
· a notice that indicates funds may not be available for x days at the time the customer selects the external funding option and submits their authorization should suffice as it becomes part of our agreement when the customer selects that funding option.
· Reg. CC does not impose an availability requirement for ACH Debit transactions, so no Reg. CC hold notice is required.
3. Would our Reg. CC Policy – Funds Availability Notice, need to be updated to refer to availability from ACH Debit transactions?
· Model language is silent in this regard, any recommendations or suggestions are welcome.
We are about to implement a risk based billpay model in online banking. Our billpay vendor will make the payments on the customers' behalf, and then send us a file that we will post to the customers' accounts. If there are insufficient funds to cover any of the billpays, we will need to attempt to collect the amount from the customer due to the fact the funds have already been sent. Would this be considered an overdraft program or an extension of credit? Would there be any Reg O concerns associated with this process considering a Director could initiate a billpay that overdaws their account and if it is considered an extension of credit it may cause a Reg O issue. I do not believe this is governed by overdraft regulations and would not be considered an extension of credit.