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#215713 - 07/26/04 07:57 PM
Final Rule Released- BOL has an analysis
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We at BankersOnline.com analyzed the final rule, and have posted an article at http://www.bankersonline.com/check21/jbcheck21rules.html.
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John S. Burnett
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#215714 - 07/26/04 08:36 PM
Re: Final Rule under Review - Article to Follow
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Power Poster
Joined: Dec 2000
Posts: 5,184
All over the map.
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Thank you! I have to give a summary this week, and appreciate you Moderators, Gurus, and all who help me wrap my mind around this stuff.
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#215715 - 07/27/04 01:01 PM
Re: Final Rule under Review - Article to Follow
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Diamond Poster
Joined: Oct 2001
Posts: 1,570
Wisteria Lane..
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Thank You! You are saving me from an immediate-read of this 122 page document
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#215716 - 07/27/04 02:40 PM
Re: Final Rule under Review - Article to Follow
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Anonymous
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Am I to understand that if we are a 100% image bank, we do not have to send Consumer Awareness Disclosures?
Barry Edwards
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#215717 - 07/27/04 03:51 PM
Re: Final Rule under Review - Article to Follow
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Our briefing has gone out. You'll also find a link to our article digesting the high points of the final rule on our home page in the New Developments block, upper left. Here's a direct link to the article
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John S. Burnett
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Fighting for Compliance since 1976
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#215718 - 07/27/04 04:02 PM
Re: Final Rule under Review - Article to Follow
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Barry,
Image statement banks will need to provide the disclosures required by new section 229.57 (final Model Form C-5A is shorter than the proposed version of the model language) if a consumer customer requests a check and the bank provides a substitute check.
But you will not be required to send the disclosure to your customers in general, unless you have some customers who receive checks in their statements. In that case, you would send a copy of the disclosure to each such account (and not the rest of your accounts) no later than the first regular communication with those customers after 10/28/04.
Your bank may decide, however, to provide either the consumer awareness disclosure or other educational material to your customer base to "bring them up to speed" or address any perceived misgivings they might have about Check 21.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8
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#215719 - 07/27/04 04:06 PM
Re: Final Rule under Review - Article to Follow
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Power Poster
Joined: Jan 2004
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Guess
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So, receipt of a substitute check, even as an image, requires redisclosure each time it occurs?
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#215720 - 07/27/04 04:23 PM
Re: Final Rule under Review - Article to Follow
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No, and this is a common misconception. Disclosure is required if (1) customers will receive original checks -- and substitute checks -- in paper form in their statements; (2) a customer requests a check and the bank sends a physical substitute check (not an image); or, (3) the bank sends a substitute check (not an image). Examples: - Bank must send disclosures by first statement following 10/28/04 to any customer who will continue to receive paper paid checks in statements.
- Customer receives an image of a substitute check printed along with 9 other check images on a page of his statement. Receipt of the image of the substitute check does NOT trigger a disclosure requirement, and the customer gets no expedited recredit rights from receipt of that image.
- Customer with image statement asks for a copy of a check to prove payment to a merchant. If bank sends a sufficient copy or copy (these don't qualify as substitute checks; they're like the copies we give customers today), no disclosure is needed. But if the bank provides a physical substitute check in response to the request, a disclosure must go with it.
- Bank receives a substitute check return item and charges it back to the bank's customer, sending the returned substitute check to the customer. A disclosure must go with it.
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John S. Burnett
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Fighting for Compliance since 1976
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#215721 - 07/27/04 05:10 PM
Re: Final Rule under Review - Article to Follow
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Anonymous
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Forgive my confusion; what if we provide a copy of the substitute check? Then disclosure required?
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#215722 - 07/27/04 05:56 PM
Re: Final Rule under Review - Article to Follow
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Only if you provide an actual substitute check. Think of it this way: If you provide the customer an original check, there are certain properties to that check that a photocopy of the check would not have. A copy (or an image) of a substitute check similarly does not have all the properties of the actual substitute check.
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#215723 - 07/27/04 06:38 PM
Re: Final Rule under Review - Article to Follow
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FINALLY ABOVE the gnat line
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I have not yet read the entire 112 pages, however I did read the overview provided by BOL. One question I was asked by our operations staff:
We image and do not provide check copies to any customer, so we would not do the mass mailing. We would not provide substitute checks to our customers as a general rule, just because they needed a copy. So copy only - no disclosure.
We will provide substitute checks for charge-back items - disclosure required - but is it required every time we charge back an item to that account or is a one-time notice with the first charge-back acceptable?
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#215724 - 07/27/04 06:46 PM
Re: Final Rule under Review - Article to Follow
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From the commentary to Regulation CC, Item XXXVI (Consumer Awareness), Sub-item A (229.57(a))-- Located on page 108 of the FRB document:
"A bank must provide the disclosure each time it provides a substitute check to a consumer on an occasional basis, regardless of whether the bank previously provided the disclosure to that consumer." (Emphasis added).
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#215725 - 07/27/04 06:53 PM
Re: Final Rule under Review - Article to Follow
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Power Poster
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FINALLY ABOVE the gnat line
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Thanks, John. It would have taken me a while to get to page 108.
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#215726 - 07/27/04 07:16 PM
Re: Final Rule under Review - Article to Follow
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Anonymous
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waldensouth... sounds like my bank is similiar to yours... my question is will you still modify your reg CC disclosure so that new customers who opened accounts after Oct 28th receive the disclosures at account opening?
thanks.
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#215727 - 07/27/04 07:21 PM
Re: Final Rule under Review - Article to Follow
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Diamond Poster
Joined: Nov 2000
Posts: 1,830
District of Columbia
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John,
I'm on page 35 and counting! One thing I want to be sure I understand - the Board was adamant about the fact that customers who have already given up their rights to receive their orgignal checks back and have agreed to receive images do not have expedited recredit rights under this section of Reg CC. The Board stated that "giving consumers expedited recredit rights ...would exceed both the text and the underlying intent of the statute." (p. 28)
I still do not see anything that prohibits a bank from extending expedited recredit rights to image-only customers if it wants to. It seems that although the language is very emphatic, it stops short of stating that you CAN'T do it. Am I correct?
BC
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#215728 - 07/27/04 08:35 PM
Re: Final Rule Released- BOL has an analysis
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Anonymous
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Where can I find the model forms?
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#215729 - 07/28/04 03:32 AM
Re: Final Rule under Review - Article to Follow
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Providing consumers privileges that are not theirs by right can bite a bear collector in the buns!
Before you think about giving customers expedited recredit rights, be aware that you cannot turn around and ask for expedited recrediting for your bank on items you didn't have to provide speedy credit on. That can leave your bank with thousands of dollars extended with no "hook" for the money on the other side.
You also might promote frivolous claims if you make this too easy for your customers.
I recommend you experience Check 21 real world for at least 6 months before you start thinking about giving away the store.
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John S. Burnett
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#215731 - 07/28/04 12:19 PM
Re: Final Rule under Review - Article to Follow
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Power Poster
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FINALLY ABOVE the gnat line
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Dear Anon, we won't modify our Reg. CC disclosures unless required by law to do so. I think it would be confusing to our customers to inform them of rights they don't have unless a check they deposit bounces. I think we'll just wait for the event to occur to inform them.
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#215732 - 07/28/04 01:05 PM
Re: Final Rule under Review - Article to Follow
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There is actually evidence of a lot of thought in the rulemakng process when you read the proposed section 229.57 and Commentary, and the final rule. It really doesn't make a lot of sense to provide customers information at account opening about something that might never occur, and then not give them the information when they might need it. Consumer customers might go months or years without ever receiving a true paper substitute check from their banks. When they do get one, from a charge-back for example, it makes sense to require information about substitute checks and expedited recrediting at that time.
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John S. Burnett
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#215733 - 07/28/04 01:11 PM
Re: Final Rule under Review - Article to Follow
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Diamond Poster
Joined: Nov 2000
Posts: 1,830
District of Columbia
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John,
Our plan is to retain the original IRD for 90 days (as we do regular checks for fraud reasons) That way, if an image customer has a problem, we can give them the expedited recredit because we will be able produce the original IRD for our customer's review and for the other bank. We believe this practice will allow our image clients to have the same rights as those who receive their checks back. As Terry stated in his thread - we do not want our image clients to begin asking for their checks back again. By utilizing this process, the expedited recredit is purely a client service issue and should not adversely impact the bank in any way.
BC
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