Do any of you have procedures that assist with monitoring what items are reran (redeposited) when returned in an AM cash letter?

A one sentence policy will do - Only those returned items from which you have a hold harmless agreement from your customer will be re-ran and within that hold harmless agreement it will state the specific parameters under which this will happen.

The wording if fine, but how does a bank monitor those items going back out to fed to be collected upon one more time????

Once you redeposit them into your customer's account and they enter the check collection system another time - what monitoring will there be? They are either paid or they end up back at your doorstep. Many large business customers maintain a separate checking account solely for these type of deposits.

Maybe I should be more clear with what I am asking. We had an officer ask us if we had some way of keeping track of the checks that were returned to us, but we sent back out to fed to attempt to collect the second time. The only thing we could come up with was to create a spreadsheet/form and have the person at that desk enter in the return information and fax it to the officer. I was hoping that someone else might have another possibility....

You might draw some conclusions from the fact that rlcarey is mystified by the request and you aren't getting any other responses. To my knowledge, this is not a common practice.

It might be helpful to go back to the officer and inquire about the intended purpose. If he or she is insistent on the need, try your spreadsheet with an agreement to re-evaluate the effort after 60 days.

Since it's the compliance and fraud officer, I would say that monitoring fraud is the issue. I also believe that they are in the process of rethinking procedures and policies - but then aren't we always doing that?????

I'm not sure why he/she would be interested specifically in this practice. You would (or should anyway) only be performing this service for your best customers in the first place. Sounds like a goose chase to me. Find out the basis for the request to make sure the outcome will meet the specific objectives. I use to hate these type of fishing trips when I was in operations and learned to ask a lot of questions. Many times there are multiple ways to skin a cat and sometimes you can find the pelt already removed through other readily available information.

Performing this for the best customers would actually miss what she is looking for. We have had several situations of which I won't go into detail as this is a "public" forum. I think by sending her a listing of our reran items, she can monitor accounts more fully. Unfortunately this particular bank deals with a lot of fraud. Luckily it has only added about 10-15 minutes or less to the day.

As for working in operations, my favorite part (sarcastically) is the constant need to change procedures. Updating procedures is a full time job!

I guess I'm confused then. How would you catch re-ran items if you are giving them back to your customers? Are you talking about those that are returned more than once prior to giving them back to the customer? You don't have a returned item counter on the deposit system? Still sounds like busy work to me.

We get the cash letter and follow remarks on accounts that tell us whether to charge the item back or send it back to through Fed to attempt to collect again. The items doesn't actually get redeposited as it never was taken out of their account when it came from Fed. Obviously, these are 1x NSF items only....

What is a returned item counter?

You have that many customers that have signed hold harmless agreements with you for automatically reprocessing checks??

I have worked in a number of larger banks and these customers numbered in the handfuls and again, they where our better customers.

Most of the more sophisticated deposit systems track the number of returned checks debited to the account similar to the way NSF items are tracked.

Can you explain the "hold harmless agreement" to me?

Well, without a bunch of citations it basically boils down to the fact that the bank has the same responsibility to notify the depositor of a returned item as every other bank in the forward collection chain.

So, for example: A $5,000 check is returned on Monday as NSF and the bank reruns the item on Tuesday and it is subsequently returned to the bank the following Monday - still NSF. The check is then debited from the customer's account and the depositor is notified of the return and provided with the check. Since the bank delayed notification of the return for a week, the depositor could sue the bank for damages if they could prove that they could have collected the item if they would have known that the item was returned the previous Tuesday.

It is not a good business practice to be rerunning checks on a wholesale basis without hold harmless agreements where the depositor authorizes the bank to rerun these item and they waive the normal notification requirements.

It's Russian Roulette - you can pull the trigger 1000 and then the one loaded barrel ruins your day.

Do you know where I can find regulation on this? We work with three banks (who all treat things differently) and would need backing if I went to them about this....

Most of the basis for this would be 12 CFR 229.33:

"(d) Notification to customer. If the depositary bank receives a returned check or notice of nonpayment, it shall send or give notice to its customer of the facts by midnight of the banking day following the banking day on which it received the returned check or notice, or within a longer reasonable time. "

Liability would be addressed in 229.38(a).

The UCC also requires prompt notice of dishonor regardless of the amount. If you fail to give it and the depositor is injured by the delay; e.g. the item purchased with the bad check was delivered in the interim, the loss is yours.

As rlcarey keeps saying, banks should not automatically re-run return items without the customer's written instruction and agreement to accept any attendant losses.

Thank you for the input. We are in the process of learning and attempting to train others. I find it amazing how many people go on the assumption of what has worked in the past and no one knows anything about regulations or codes....

After reading a couple of threads on this topic, im checking our procedures and documentation.
First, redeposited check / re running a check.
Item comes back NSF, if the accounting department sends the check again, this is considered to be redeposited? (another thread says yes). But to consider it redeposited, do you have to debit the check from the customers account before you resubmit it, or just resending it counts.
2- if you are resubmitting, do you send the notice in 12 CFR 229.33 on the first NSF, the second NSF or both?

Within this same topic of return checks .. does anyone know the time frame a payee bank has for returning a counterfeit chec or money order.

First, note that I am changing the name of the thread when I am finished with this post. I can't stand any longer seeing "reran."

As for dhfs's question, it only makes sense if it refers to the payor bank, since that's the bank that would bounce a counterfeit. And the answer is, within the midnight deadline (close of business on the business day following the day the check is presented for payment).

After reading a couple of threads on this topic, im checking our procedures and documentation.
First, redeposited check / re running a check.
Item comes back NSF, if the accounting department sends the check again, this is considered to be redeposited? (another thread says yes). But to consider it redeposited, do you have to debit the check from the customers account before you resubmit it, or just resending it counts.
2- if you are resubmitting, do you send the notice in 12 CFR 229.33 on the first NSF, the second NSF or both?

this post questions was me...

Whether it is "redeposited" or not would only affect the availability of a Regulation CC exception hold and that has not been an issue in this thread. My answer would be, "No, it has not been redeposited, the return won't even show up on the periodic statement."

Under the UCC, a customer notice is required for each bounce. If the item is $2500 or more Regulation CC would require multiple notices as well.

Again, the bank needs a written agreement with the customer before it automatically reclears checks. Some of these issues could be addressed there, but don't attempt to amend any Regulation CC requirements.

Actually, Ken's reference is to the bank's receipt of a notice from the payor bank that a check of $2,500 or more has been returned. That notice would trigger the Regulation CC requirement for the depository bank to notify its depositor. If the check is presented and returned more than once, there would be multiple notices.

To be perfectly clear on this -- Both the UCC and Regulation CC require a customer notice if the depository bank receives notice that a deposited item is returned. The triggering notice can be either the actual return of the item or a Regulation CC $2,500 notice under section 229.33. One notice can satisfy both the UCC requirement and the Regulation CC requirement, and only one notice is required per return (you don't need a separate notice for the receipt of the large item receipt notice, plus one when the actual item is received).

I strongly urge you to ask your compliance officer for some adequate Regulation CC training. When you have gone through that training, you will find that it will all make more sense.