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#2278154 - 11/22/22 11:24 PM Chargeback To Acct If We Fail Midnight Deadline
Compliance Poster Offline
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Joined: Sep 2001
Posts: 432
I’m unable to find an answer to this question. Will you please help me? If we, the paying bank, fail to return a check to the depository bank by the midnight deadline and we are then liable for the amount, can we chargeback the amount to the customer’s account that it was drawn from? Also is this a UCC issue or Reg CC?

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#2278158 - 11/23/22 09:17 AM Re: Chargeback To Acct If We Fail Midnight Deadline Compliance Poster
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 82,166
Galveston, TX
I do not understand - why are you returning the item to begin with - you mean the customer was overdrawn? If the item is a forgery, then no.
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#2278168 - 11/23/22 02:53 PM Re: Chargeback To Acct If We Fail Midnight Deadline rlcarey
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Randy,
Yes, thank you, it involves a forgery. Also, is there a time-period in the UCC for a depositor to notify us after receiving a statement?

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#2278173 - 11/23/22 03:40 PM Re: Chargeback To Acct If We Fail Midnight Deadline Compliance Poster
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,559
Illinois
The UCC varies depending on state law so you would need to check with legal counsel to confirm. For most states the UCC gives the customer one year to report a forgery. This can also be shortened by your deposit agreement so legal counsel should review that as well.
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#2278179 - 11/23/22 04:15 PM Re: Chargeback To Acct If We Fail Midnight Deadline Compliance Poster
Compliance Poster Offline
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Posts: 432
Brian, thank you for your advice.

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#2278187 - 11/23/22 05:05 PM Re: Chargeback To Acct If We Fail Midnight Deadline Compliance Poster
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Back to your question -- If the bank had determined to return the check unpaid because of NSF or an overdraft or the date of the check, and missed the midnight deadline for the return, the bank generally can charge its customer's account for the check.

But if payment was stopped on the check or the check is clearly a counterfeit or the issuer signature appears to be forged (or just plain isn't authorized), no, you can't charge the customer's account.

There are exceptions for service interruptions preventing the timely return.
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