Answer:
This depends on the customer and the transaction. If the customer is a consumer and the transaction is subject to Regulation E, the consumer has sixty days from the day the statement is delivered reflecting the transactions to file a claim under the Error Resolution procedures of Section 205.11 of the regulation. You can't shorten that time period, and if the customer's claim is that the transaction was unauthorized, there's no sunset on the consumer's right to file a claim under Section 205.6, although there can be a limit on how much the bank is obligated to reimburse, depending on the fact situation.
If the transaction is not subject to Regulation E, but is subject to the UCC, look to Section 4-406 of the UCC in your state. Under the model wording for that section, your customer generally gets a year from delivery of the statement reflecting the payment of an altered or unauthorized item to file a claim. Your liability to the customer can be cut off if there is a series of unauthorized items created by the same wrongdoer and the customer fails to notify you within thirty days of delivery of the statement showing the payment of the first such item.
The results or effects of Section 4-406 can be altered by agreement of the parties, but the bank cannot disclaim its duty of good faith in the payment of checks. One of the things that could be altered by agreement (in your deposit agreement, for example) is the timeframe in which the customer must file a claim or notify you of an altered or unauthorized item. You would probably be laughed out of court if you didn't allow at least some reasonable time after statement delivery for the customer to make a diligent inspection of the statement and inquire about an item that isn't fully described on or with the statement (as might be the case if your bank does not return either checks or check images with statements). Thirty days seems manifestly fair, and, for businesses in particular, you might be able to cut it to fourteen days.
I have heard of banks that refuse to accept claims of unauthorized EFTs from business accounts if more than a day has passed since the settlement date. That thinking is based on the fact that the item can't be returned using the ACH infrastructure. I have never agreed with that argument; if the transaction had been made by check, the bank would not have been able to return it past its midnight deadline, but would be liable to its customer nonetheless if the check had not been authorized.
If you're seriously thinking about trying to cut back on your customers' claim windows, have a complete discussion with your bank counsel or outside legal advisor in which you lay out what you'd like to do, and counsel researches state law and case law so that (1) the right decisions are made, (2) the right contractual changes are made, (3) any required notification is given to current customers, and (4) your customer contact people can be adequately trained on the new parameters, so that they don't look like idiots when dealing with customers.
First published on BankersOnline.com 11/22/10
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