Answer:
I thought we were not going to post these tired old chestnuts, Sam! This one's been roasted, toasted, diced and sliced too many times already!
Regulation E does not regulate paper drafts.
There are limited instances in which both the drawee bank and the depository bank are located in states that have adopted UCC language adding transfer and presentment warranties that such drafts are authorized by the consumers from whose accounts they are drawn. In those instances, there is an extended (but not indefinite) period for the customer to claim the draft is unauthorized, and the drawee bank to return the item under the warranty.
Except for those limited cases, however, the drawee bank has only until the banking day following the date of presentment to dishonor such a draft. After that time, the bank is accountable for the draft, in spite of the fact that its customer may claim lack of authorization for 30 days (or more) after the item shows up in a statement.
First published on BankersOnline.com 09/2/03
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