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#138894 - 12/11/03 08:39 PM Claim of Late Return & the UCC
Anonymous
Unregistered

We recently did a claim of late return for a $9,000 counterfiet check that was deposited here. Under the late return guidelines, the paying bank has 20 business days to challenge the claim of late return, and after the 20 business days our Fed provisional credit becomes final.

I have talked to someone at FRB about this, and was told the paying bank can still come back and sue us to recover the $9,000 under the UCC. Is this true? And if so, why? I think he was alluding to the 1 or 3 years the customer has to notify the paying bank of a forged signature/endorsement. I don't think this applies in this case.
Last edited by John Burnett; 04/08/04 07:29 PM.
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#138895 - 12/12/03 10:42 AM Re: Calim of Late Return & the UCC
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
I believe the Fed representative was just trying to explain that the the Fed's procedures are only available in the 20 day time frame cited. If you claim a late return, they process your claim and recredit your account. If the drawee bank responds in a timely fashion, alleging the return was timely, the Fed simply reverses the entries and leaves you to deal with the drawee bank directly. The Fed does not make any decision on the merits of your claim or that of the drawee bank.

If you file a claim that the item was returned late and the drawee institution does not respond within the 20 days, they have lost their right to use the Fed as an agent for saying their return was timely. However, they are not barred from coming back to you on a "bank to bank" basis.
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#138896 - 04/08/04 05:03 PM Re: Calim of Late Return & the UCC
Mike Baker Offline
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Mike Baker
Joined: Dec 2002
Posts: 192
Tennessee
I don't trust the FED on the 20 business day period...at least not the branch with which we dealt recently...we work through a 3rd party item processor, and we were literally down to wire on getting information from them [a separate issue] on a substantial number of items that we had in fact returned timely, but had been disputed by the credit union on which the items were drawn. On the 19th day, we sent, via Airborne Express, all the required documentation...we even called to verify the address, which was a different address than posted on their web site because of the fact that we were sending the items via Airborne Express [apparently they have a different area that accepts those packages, as opposed to regular mail.] We have a signed receipt showing that the FED received the items the next morning. In any case, when our treasurer did not receive notification of entry reversals, she contacted the FED, and was told by several people their records showed that it was not until 10 days later that they logged in the items, and that therefore we would have to deal directly with the credit union. Ironically, for an unknown reason, we did wind up getting a reversal on one of the items that was in the middle of the stack of items sent. So apparently business 20 days does not really mean 20 business days...the attitude that we obtained from several employees with whom the treasurer spoke was more or less, "We're the FED...we can do whatever we want to." There was no good reason we were given why they took 10 days from the date of receipt to log in the items. Only in a much later conversation did our treasurer happen upon someone there who sympathized, and acted as if she could have done something to help if we had made contact with her a few weeks earlier...so it's like you are at the mercy of whoever happens to answer the phone there if you have a legitimate claim. This matter is now in the hands of an attorney. Has anyone else ever had such a terrible experience? Is there any way that the FED can be forced to live up to what they say that will do?
The rule reads "received," not "received, logged in and processed" within 20 business days.
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#138897 - 04/19/04 03:31 PM Re: Calim of Late Return & the UCC
Anonymous
Unregistered

Just wondering, as there have not been any responses...are we the only financial institution to have such an experience with the Fed? Does anyone know of any effective recourse that we have, or could have had, in dealing with the Fed on this matter? It seems like unrelenting persistence may have been of some help, but after about 3 calls getting the same answer from 3 different people, our treasurer felt like the matter had been pursued with them about as far as it could be. Any ideas...words of wisdom...other such experiences...etc.?

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#138898 - 04/19/04 03:54 PM Re: Calim of Late Return & the UCC
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
We have been in a similar position and Ken summed up the implications nicely. The Fed is not going to evaluate your claims, they are just going to process what is submitted.

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#138899 - 04/19/04 07:20 PM Re: Calim of Late Return & the UCC
Mike Baker Offline
100 Club
Mike Baker
Joined: Dec 2002
Posts: 192
Tennessee
But my point is that the Fed did NOT process what was submitted [other than, inexplicably, one item from the middle of the stack] when the items were submitted within the proper time frame. Not only did they act discriminately, they were also inconsistent, as we did get credit for 1 item submitted, but none of the rest.
So I have no trust that the Fed [at least the branch with which we dealt] will process what was submitted...but I know this, if there is a next time, not only will we push our item processor to move more quickly [although they did get items to us in what was defined to be sufficient time], we will puruse multiple calls to the Fed...even that may not be enough, but I feel like we have been unjustly penalized when we abided by the rules...in any case, thanks for listening.
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"When you believe He's all you need,that will be your defining moment." [from "Defining Moment" Newsong, Sheltering Tree CD]

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#138900 - 04/19/04 07:44 PM Re: Calim of Late Return & the UCC
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
I wasn't trying to argue with you, Mike, I was just responding to anon. I can't speak to why the fed would have acted differently in your case - that is not what I have known them to do.

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#138901 - 04/19/04 09:39 PM Re: Calim of Late Return & the UCC
Mike Baker Offline
100 Club
Mike Baker
Joined: Dec 2002
Posts: 192
Tennessee
No argument intended...with you...I would love to find, however, someone within the Fed who would acknowledge that we were entitled to receive credit for all of the items submitted, not just one picked at random...dream on, right? ...in any case, I apologize if I came off as argumentative with you.
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"When you believe He's all you need,that will be your defining moment." [from "Defining Moment" Newsong, Sheltering Tree CD]

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#138902 - 04/19/04 10:04 PM Re: Calim of Late Return & the UCC
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
No, you don't need to apologize - I just wanted to clarify that I wasn't disputing anything. We're cool!

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