Questions on Check 21 course content
Posted By: John Burnett
Questions on Check 21 course content - 09/01/04 03:41 PM
If you've enrolled in the BankersOnline.com Check 21 email course and have a question
about its content, please post it here, in this Thread. We (Mary Beth, Ken and I) would like to clear up anything we haven't said clearly, correct anything we may have said incorrectly (Ken and I are not perfect
), or otherwise address any problems you have with what we've had to say in these 21 lessons.
To help us out, please mention in your post exactly which lesson(s) you are asking about.
This trial of the Lessons by Email concept has been rewarding for the three of us. We want to make sure your experience is as positive.
First- thank you for creating ths thread. It will be helpful to have a central area for these questions.
My confusion lies in some of the content from Day Eight-Substitute Check Warranties. You state that the "warantee is protected against the risk that problems with ...encoding or other operational errors...might result in problems such as not being able to use ths substitue check as evidence of payment..."
I just want to be sure I understand this correctly. If a customer comes to us with a substitute check that is clearly encoded for the wrong amount - she wrote it for $500.00 and it is encoded as $50.00 - my understanding is that we would handle this type of error just as we would handle any kind of encoding error, whether the check is the original, a substitute an image, etc. Do I understand correctly that if this same customer needs to use this item - which happens to be a substitute check- for proof of payment- and she can't because it is encoded incorrectly, then she would have a warranty claim? What actions would need to be taken that would not be taken now if the item was an original check? I'm just trying to get my mind around what a warranty claim would do for this customer and why something like this would be a warranty claim at all.
Thanks for your help!
BC
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/02/04 01:53 PM
Let's assume that the situation is worse than you described. The check is originally drawn for $500. It's deposited by the payee, which only receives $50 due to an encoding error on the original check. This is compounded when the SC is created, because it's encoded for $500, the original amount of the check. Your customer is charged correctly, but only received credit with the payee for $50. The payee is a credit card company that heaps late payment penalties and increased interest rates upon the hapless customer. The image of the check on the SC is blurry enough that the original amount and encoded amounts on the check are illegible.
The customer has no ability to use the SC to prove the original check was for the proper amount to pay her credit card payment. So she has a warranty claim for lack of legal equivalence. She needs the original check or a better SC.
Quote:
The image of the check on the SC is blurry enough that the original amount and encoded amounts on the check are illegible.
The customer has no ability to use the SC to prove the original check was for the proper amount to pay her credit card payment. So she has a warranty claim for lack of legal equivalence. She needs the original check or a better SC.
I agree with you in this scenario because there is a problem with the SC (blurry, etc.). However, if it is just an encoding error, wouldn't it be handled the same way we do now - just like any encoding error on any check? Would the fact the the item is a substitute check give the customer any addtional rights if the encoding error is the only issue?
BC
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/02/04 05:23 PM
Probably not, BC. Unless the depositor incurred other losses beyond what could be resolved in the normal way, and those could be attributed to the fact that she got an SC.
Posted By: Anonymous
Re: Questions on Check 21 course content - 09/13/04 08:03 PM
Sorry to use Anon but I seem to have forgot my password. I am currently receiving the Check 21 e-mails and have received two Day 11 e-mails. I am missing Day 12. My display name is Suza52.
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/14/04 03:28 AM
Suza52. I cannot locate your record with that display name. Please email me at
john@bankersonline.com and provide the email address to which we are sending the lessons. I can then provide you access to lesson 12.
Posted By: fnbaltus
Re: Questions on Check 21 course content - 09/15/04 03:12 PM
This question is in reference to lesson 15 of the Check 21 Basics. In the first paragraph it states that to make a claim under the procedures for expedited recredit, a consumer must have received a substitute check, either in a periodic statement or separately as a result of a request or of a charged-back deposited item. The consumer does not need to possess the substitute check at the time the claim is made, however.
Here is our question: If a customer who receives image statements received an image of a substitute check and says that it was charged incorrectly to his account, there is a problem with the image in that the written amount of the check is not clearly visible, does this customer fall under the expedited recredit guidelines?
Thanks!
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/16/04 03:33 AM
No. The customer does not become entitled to expedited credit processes unless and until he or she receives an actual substitute check. I surmise that the reasoning here is that the consumer should first get an SC to see if it's more legible than the copy provided. Then, if the consumer needs expedited credit processing, he or she can get it if he or she can provide each of the four pieces of information required for the claim.
Posted By: nmurphy
Re: Questions on Check 21 course content - 09/23/04 06:24 PM
I attended the Check 21 course "Check 21 Consumer Compliance". Page 20 of the materials references that the timing notice of the claim is 30 calendar days. All other materials that I have read (and the Reg) reference 40 days.
Please verify.
Posted By: Anonymous
Re: Questions on Check 21 course content - 09/23/04 07:29 PM
I have a question in relation to day eleven & twelve of the course:
Our bank sends images only to our customers with the monthly statements, if a customer requests a check or receives one as a return item and it happens to be a substitute check, are we required to send them the C 5-A
disclosure?
Thank you
Posted By: Anonymous
Re: Questions on Check 21 course content - 09/23/04 07:59 PM
As noted in Lesson 11, this customer would fall into "Group 2," and would be entitled to receive the notice if you send them a substitute check, either in response to a request for a copy or original, or as a return item.
Posted By: Anonymous
Re: Questions on Check 21 course content - 09/23/04 08:03 PM
I am forwarding your comment to the instructors for the Webinar.
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/23/04 08:11 PM
Apologies, all. I wasn't logged in. The last two anonymous posts were mine!
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/23/04 08:39 PM
Quote:
I attended the Check 21 course "Check 21 Consumer Compliance". Page 20 of the materials references that the timing notice of the claim is 30 calendar days. All other materials that I have read (and the Reg) reference 40 days.
Please verify.
Noel,
The materials are correct. The reference on page 20 is to warranty claims. The 40 day period involves claims under the expedited recredit rule, and is deemed to override the warranty claim period if applicable.
Posted By: Anonymous
Re: Questions on Check 21 course content - 09/23/04 08:49 PM
Quote:
I attended the Check 21 course "Check 21 Consumer Compliance". Page 20 of the materials references that the timing notice of the claim is 30 calendar days. All other materials that I have read (and the Reg) reference 40 days.
Please verify.
It's confusing, but there are different time periods. On an expedited recredit claim, the consumer has 40 days to make a claim for expedited recredit.
In the spot in the materials that you are mentioning, we are NOT referring to an expedited recredit claim. We're talking about a plain vanilla warranty claim (which could even be made by a business customer.) The notice of that type of claim should be made within 30 days -- but if it's not, that doesn't mean the claim is barred. It simply means the potential damages may be reduced.
Posted By: Anonymous
Re: Questions on Check 21 course content - 09/24/04 04:33 PM
Quote:
As noted in Lesson 11, this customer would fall into "Group 2," and would be entitled to receive the notice if you send them a substitute check, either in response to a request for a copy or original, or as a return item.
Would we have to send the disclosure everytime? Example: A customer requests a paper copy of the SC, then a week later we send the same customer a returned item that is a SC. Are we required to send two of the same disclosures on these two separate occasions to the same customer and so-on thereafter?
Thank you!
Posted By: Anonymous
Re: Questions on Check 21 course content - 09/24/04 09:10 PM
Yes, you must provide the disclosure each time you send a customer a substitute check, with the exception of any that routinely accompany a periodic statement.
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/24/04 09:41 PM
Sorry. Once again, I neglected to log in for the last post. Mea culpa!
Posted By: Ann
Re: Questions on Check 21 course content - 09/25/04 03:01 AM
That's what happens when you are on the road..I enjoyed meeting you today at the ABA NCS and the course you taught on Regs D and Q. As I've been working through e-mail tonight, I had a situation where a customer is upset because he gets images of original checks in his statement and these do not carry the legal equivalence as "substitute checks". I've looked through the course material that I brought with me and other resources as well and have been trying to find a good Q and A for this. I know that a true "substitute check" is the only "legal equivalent" to the original, but copies of checks such as what he receives in his statement or views on line are often adequate as proof of payment. Can you help me give a satisfactory answer to defend these check images in statements?
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/25/04 01:27 PM
Some thoughts, Ann (and it was a pleasure meeting you after the D/Q session)--
- After they have done their primary job -- transferring value from the account of the drawer to the payee -- checks really have little use, except for an occasional proof of a payment.
- Even that most skeptical of agencies, the IRS, accepts photocopies of checks as evidence of a payment if the original check is not available.
- It's never really a good idea to hand an original check over to a would-be creditor, since there are documented cases of those payees resubmitting previously-paid checks resulting in duplicate payments.
- The quality of images (legibility, accurate depiction of the information on the original, etc.) today is incredibly superior to that of only five years ago.
- For those isolated cases in which a customer writes a check that needs to be maintained as "proof" for several years, it's possible to immediately request and obtain a substitute check or other copy (assuming the original isn't available) and retain it against the day that evidence is needed. Examples might be checks involved in a home purchase or improvement, where proof of cost basis is needed later for tax purposes.
I hope this was of some help.
Posted By: skinnyminny
Re: Questions on Check 21 course content - 09/28/04 07:53 PM
From Day 15 lesson, this is a question from ITIM that was left unanswered in the regular Check 21 Threads:
"There seems to be some disagreements regarding the expedited recredit for warranty claims. In talking with other banks, some banks feel that expedited recredit is ONLY for claims that directly correlate to the SC being used, for example blurry or duplicate debits), but other banks think that expedited recredit is for ANY & ALL warranty claims, such as forged/missing endorsement even though it has nothing to do with the use of a SC. Day 15 lesson seems to agree with the side that says it can be used for all warranty claims. Can someone clarify this? If it IS for all warranty claims, isn’t it still subject to defenses? Our lawyer and another bank's lawyer disagree and say it is subject to interpretation, which I highly doubt."
Is there an answer, or is it up for interpretation?
Posted By: skinnyminny
Re: Questions on Check 21 course content - 09/28/04 07:58 PM
The question from Lesson 15 was actually from Chris T., not ITIM. My memory is shortcircuiting. Sorry!
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/28/04 08:31 PM
Read the Commentary to § 229.54(a). It makes it pretty clear that a claim can be made under any warranty to the consumer, not just the substitute check warranties. One of the comments reads
Quote:
A consumer must in good faith assert that the bank improperly charged
the consumer’s account for the substitute check or that the consumer has
a warranty claim for the substitute check (or both). The warranty in
question could be a substitute check warranty described in § 229.52 or
any other warranty that a bank provides with respect to a check under
other law. A consumer could, for example, have a warranty claim under
§ 229.34(b), which contains returned check warranties that are made to
the owner of the check.
Posted By: Tina A Sweet
Re: Questions on Check 21 course content - 09/29/04 01:37 PM
How do we get information on the email course?
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/29/04 02:05 PM
Here's a
LINK to the information. The course is now being offered at $21.95 (that's just under $1 an installment, when you count the final recap of all the Q&As!) Discounts are available for multiple enrollments paid for at the same time.
Posted By: Anonymous
Re: Questions on Check 21 course content - 09/29/04 08:29 PM
Question:
I am entitle to send the official disclosure only when the customer receives a physical Substitute check right? not when a copy of SC is generated?
Posted By: John Burnett
Re: Questions on Check 21 course content - 09/29/04 08:37 PM
Correct. This is in addition to the general notice you'll send to any customers who get checks back in their statements.
Posted By: cbailey
Re: Questions on Check 21 course content - 09/30/04 04:51 PM
In the creation of a substitute check what if the original check is written with a colored gel pen and the image doesn't transfer. What happens and who becomes responsible for the check?
Posted By: doodle
Re: Questions on Check 21 course content - 10/06/04 02:29 PM
Could you please explain the "positive pay" reference in the course? I was confused by the terminology.
Posted By: John Burnett
Re: Questions on Check 21 course content - 10/07/04 04:06 PM
Under Check 21, if the (faulty) image of the check is reconverted to a substitute check, the bank that creates the substitute check will bear the onus of the substitute check warranties and indemnities. That's as far as Check 21 goes.
If the bank that truncates the check is the same bank that reconverts the check (that is possible), the imaging bank carries the onus and will have to deal with its customer that deposited the check.
If however the truncating bank and the reconverting bank are different banks (more likely scenario), there will most likely be an agreement or agreements between the banks that exchange images, contractually creating warranties for the image quality (outside of Check 21). In that way, the onus gets shifted contractually back to the truncating bank, which will have to deal with its customer (the depositor).
Banks may have in place contractual language shifting losses back to customers who deposit checks that cannot be imaged successfully. If they don't, the depository bank will "eat" the loss. If they do, the depositing customers will have an incentive to refuse checks that are likely to be non-image friendly. That includes, by the way, checks with "cutesy" theme pictures printed on them that might conflict with imaging technology. The big check printers (Harland, Deluxe, etc.) will get on board quickly eliminating these checks from their catalogs. They'll also influence their captive "off-brand" direct sellers like Current. Banks may have to impose financial penalties on customers for continued use of the non-imageable checks.
Posted By: Anonymous
Re: Questions on Check 21 course content - 10/15/04 05:28 PM
Hello. I was wondering if check 21 involves the change of either the face of the check/ or format / stock used for companies who write checks.
Please advise.
Thank you very much.
Posted By: John Burnett
Re: Questions on Check 21 course content - 10/15/04 06:48 PM
There is a current ANSI standard for check stock. My sources tell me that if checks that are issued conform to that standard, they should be compatible with the image technology to be used to truncate and reconvert checks.
It's likely that one of the by-products of Check 21 is a shift in check security features away from those elements that won't survive imaging and toward technologies that will both survive imaging and provide more robust anti-fraud features.
It's also likely that check issuers who have been wont to emblazon their checks with cutesy little graphics and pictures will be pressured to drop the practice in the name of image clarity.
Posted By: Terry
Re: Questions on Check 21 course content - 10/25/04 08:00 PM
Hi John,
On day 18 you talk about delaying availability of the provisional recredit. But the course doesn't address how the bank should inform the customer of the fact that we're delaying availability.
I've seen some threads posted here in the Check 21 forum that suggest filling in the availability date on the provisional recredit notice with language similar to one of the explanations shown here.
- You may withdraw these funds within 45 days after we receceived your claim unless we notify you that the funds are available sooner
or
- You may withdraw these funds once we complete our investigation or 45 days after we received your claim, whichever is earlier.
Are these methods acceptable per the regulation or is there a different way that you'd recommend? Also, do we need to state that we will not impose an overdaft fee with respect to checks drawn by the customer on these recredited funds until the fifth day after the date of our notice?
Thanks.
Posted By: John Burnett
Re: Questions on Check 21 course content - 10/25/04 08:27 PM
The regulation requires that you notify the consumer of "the date on which the recredited funds will be available for withdrawal." I read this to require that you must specify a date which is no more than 45 days from the date of the claim, not the period of time for which you are delaying availability. The sample form C-23 provides a place for that date. I'd recommend adding "or sooner, if we finalize this claim sooner in your favor," or words to that effect.
There is no requirement that you notify the customer that you'll waive OD fees on drafts drawn against provisionally recredited funds for which you are delaying availability.
Gratuitous thoughts: The regulation requires you to waive the fee, but does not require you to honor checks drawn against the funds on which you are withholding availability. Also of note is the lack of any parallel requirement if the bank later decides to reverse a recredited amount.
Posted By: Terry
Re: Questions on Check 21 course content - 10/25/04 08:36 PM
Thanks. I missed the point that we need to state an actual date.
Posted By: CompGuy15
Re: Questions on Check 21 course content - 12/09/04 09:58 PM
Great Information...Thanks