I am so confused! My bank has never been a reconverting bank (we've never created our own substitute checks), and management has decided they no longer want to pay for expensive IRDs from the Fed.

This impacts our operations for handling returns (charge-backs). Management has proposed we simply give a copy of the check (NOT a substitute check) to our depositor, in the form of a cut-out-and-taped-together (front and back) photocopy of the item. Operations folks are saying this can be a negotiable item.

What? Has anyone heard of this? Here are my questions concerning this practice:

1) Must we provide an IRD of the chargeback to our depositor, or may we simply provide a copy? I know the IRD carries all the legal protections, and the copy would have none, but can we even do this?

2) Is this taped-together copy really a negotiable instrument? It boggles my mind, but they swear they've done it before.

3) If we aren't required to create an IRD, and the copy isn't negotiable, what are we to give to the depositor? They must receive something to make another collection attempt.

Thanks for any and all help you can provide!

If you have reached a point that you are charging back the account, then this item can't be resubmitted. That being the case, it does not matter what if anything you give back to the customer. Some back just provide an image of the item and some banks do not even do that.