Description
PAGES TOTAL: 18
Public Law 108–100 108th Congress
An Act
To facilitate check truncation by authorizing substitute checks, to foster innovation in the check collection system without mandating receipt of checks in electronic form, and to improve the overall efficiency of the Nation’s payments system, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Check Clearing for the 21st Century Act’’ or the ‘‘Check 21 Act’’.
(b) TABLE OF CONTENTS.—The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings; purposes.
Sec. 3. Definitions.
Sec. 4. General provisions governing substitute checks. Sec. 5. Substitute check warranties.
Sec. 6. Indemnity.
Sec. 7. Expedited recredit for consumers.
Sec. 8. Expedited recredit procedures for banks.
Sec. 9. Delays in an emergency.
Sec. 10. Measure of damages.
Sec. 11. Statute of limitations and notice of claim.
Sec. 12. Consumer awareness.
Sec. 13. Effect on other law.
Sec. 14. Variation by agreement.
Sec. 15. Regulations.
Sec. 16. Study and report on funds availability.
Sec. 17. Statistical reporting of costs and revenues for transporting checks between
Federal Reserve banks.
Sec. 18. Evaluation and report by the Comptroller General. Sec. 19. Depositary services efficiency and cost reduction. Sec. 20. Effective date.
SEC. 2. FINDINGS; PURPOSES.
(a) FINDINGS.—The Congress finds as follows:
(1) In the Expedited Funds Availability Act, enacted on
August 10, 1987, the Congress directed the Board of Governors of the Federal Reserve System to consider establishing regula- tions requiring Federal reserve banks and depository institu- tions to provide for check truncation, in order to improve the check processing system.
(2) In that same Act, the Congress—
(A) provided the Board of Governors of the Federal
Reserve System with full authority to regulate all aspects of the payment system, including the receipt, payment, collection, and clearing of checks, and related functions of the payment system pertaining to checks; and
12 USC 5001.
VerDate 11-MAY-2000
23:03 Oct 29, 2003
Jkt 019139
PO 00100
Frm 00002 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108 apps24 PsN: PUBL100
117 STAT. 1178
12 USC 5002.
PUBLIC LAW 108–100—OCT. 28, 2003
(B) directed that the exercise of such authority by the Board superseded any State law, including the Uniform Commercial Code, as in effect in any State.
(3) Check truncation is no less desirable in 2003 for both
financial service customers and the financial services industry, to reduce costs, improve efficiency in check collections, and expedite funds availability for customers than it was over 15 years ago when Congress first directed the Board to consider establishing such a process.
(b) PURPOSES.—The purposes of this Act are as follows:
(1) To facilitate check truncation by authorizing substitute
checks.
(2) To foster innovation in the check collection system
without mandating receipt of checks in electronic form.
(3) To improve the overall efficiency of the Nation’s pay-
ments system.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall apply: (1) ACCOUNT.—The term ‘‘account’’ means a deposit account
at a bank.
(2) BANK.—The term ‘‘bank’’ means any person that is
located in a State and engaged in the business of banking and includes—
(A) any depository institution (as defined in section 19(b)(1)(A) of the Federal Reserve Act);
(B) any Federal reserve bank;
(C) any Federal home loan bank; or (D) to the extent it acts as a payor—
(i) the Treasury of the United States;
(ii) the United States Postal Service;
(iii) a State government; or
(iv) a unit of general local government (as defined
in section 602(24) of the Expedited Funds Availability
Act).
(3) BANKING TERMS.—
(A) COLLECTING BANK.—The term ‘‘collecting bank’’ means any bank handling a check for collection except the paying bank.
(B) DEPOSITARY BANK.—The term ‘‘depositary bank’’ means—
(i) the first bank to which a check is transferred, even if such bank is also the paying bank or the payee; or
(ii) a bank to which a check is transferred for deposit in an account at such bank, even if the check is physically received and indorsed first by another bank.
(C) PAYING BANK.—The term ‘‘paying bank’’ means—
(i) the bank by which a check is payable, unless the check is payable at or through another bank and is sent to the other bank for payment or collection; or
(ii) the bank at or through which a check is payable and to which the check is sent for payment or collec- tion.
(D) RETURNING BANK.—
VerDate 11-MAY-2000
22:57 Oct 29, 2003 Jkt 029139 PO 00100 Frm 00003 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108 apps24 PsN: PUBL100
PUBLIC LAW 108–100—OCT. 28, 2003 117 STAT. 1179
(i) IN GENERAL.—The term ‘‘returning bank’’ means a bank (other than the paying or depositary bank) handling a returned check or notice in lieu of return.
(ii) TREATMENT AS COLLECTING BANK.—No provi- sion of this Act shall be construed as affecting the treatment of a returning bank as a collecting bank for purposes of section 4–202(b) of the Uniform Commercial Code.
(4) BOARD.—The term ‘‘Board’’ means the Board of Gov- ernors of the Federal Reserve System.
(5) BUSINESS DAY.—The term ‘‘business day’’ has the same meaning as in section 602(3) of the Expedited Funds Avail- ability Act.
(6) CHECK.—The term ‘‘check’’—
(A) means a draft, payable on demand and drawn
on or payable through or at an office of a bank, whether or not negotiable, that is handled for forward collection or return, including a substitute check and a travelers check; and
(B) does not include a noncash item or an item payable in a medium other than United States dollars.
(7) CONSUMER.—The term ‘‘consumer’’ means an individual
who—
(A) with respect to a check handled for forward collec-
tion, draws the check on a consumer account; or
(B) with respect to a check handled for return, deposits the check into, or cashes the check against, a consumer
account.
(8) CONSUMER ACCOUNT.—The term ‘‘consumer account’’ has the same meaning as in section 602(10) of the Expedited Funds Availability Act.
(9) CUSTOMER.—The term ‘‘customer’’ means a person having an account with a bank.
(10) FORWARD COLLECTION.—The term ‘‘forward collection’’ means the transfer by a bank of a check to a collecting bank for settlement or the paying bank for payment.
(11) INDEMNIFYING BANK.—The term ‘‘indemnifying bank’’ means a bank that is providing an indemnity under section 6 with respect to a substitute check.
(12) MICR LINE.—The terms ‘‘MICR line’’ and ‘‘magnetic ink character recognition line’’ mean the numbers, which may include the bank routing number, account number, check number, check amount, and other information, that are printed near the bottom of a check in magnetic ink in accordance with generally applicable industry standards.
(13) NONCASH ITEM.—The term ‘‘noncash item’’ has the same meaning as in section 602(14) of the Expedited Funds Availability Act.
(14) PERSON.—The term ‘‘person’’ means a natural person, corporation, unincorporated company, partnership, government unit or instrumentality, trust, or any other entity or organiza- tion.
(15) RECONVERTING BANK.—The term ‘‘reconverting bank’’ means—
(A) the bank that creates a substitute check; or
VerDate 11-MAY-2000
22:57 Oct 29, 2003
Jkt 029139 PO 00100 Frm 00004 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108 apps24 PsN: PUBL100
117 STAT. 1180
12 USC 5003.
PUBLIC LAW 108–100—OCT. 28, 2003
(B) if a substitute check is created by a person other than a bank, the first bank that transfers or presents such substitute check.
(16) SUBSTITUTE CHECK.—The term ‘‘substitute check’’
means a paper reproduction of the original check that—
(A) contains an image of the front and back of the
original check;
(B) bears a MICR line containing all the information
appearing on the MICR line of the original check, except as provided under generally applicable industry standards for substitute checks to facilitate the processing of sub- stitute checks;
(C) conforms, in paper stock, dimension, and otherwise, with generally applicable industry standards for substitute checks; and
(D) is suitable for automated processing in the same manner as the original check.
(17) STATE.—The term ‘‘State’’ has the same meaning as
in section 3(a) of the Federal Deposit Insurance Act.
(18) TRUNCATE.—The term ‘‘truncate’’ means to remove an original paper check from the check collection or return process and send to a recipient, in lieu of such original paper check, a substitute check or, by agreement, information relating to the original check (including data taken from the MICR line of the original check or an electronic image of the original check), whether with or without subsequent delivery of the
original paper check.
(19) UNIFORM COMMERCIAL CODE.—The term ‘‘Uniform
Commercial Code’’ means the Uniform Commercial Code in effect in a State.
(20) OTHER TERMS.—Unless the context requires otherwise, the terms not defined in this section shall have the same meanings as in the Uniform Commercial Code.
SEC. 4. GENERAL PROVISIONS GOVERNING SUBSTITUTE CHECKS.
(a) NO AGREEMENT REQUIRED.—A person may deposit, present, or send for collection or return a substitute check without an agreement with the recipient, so long as a bank has made the warranties in section 5 with respect to such substitute check.
(b) LEGAL EQUIVALENCE.—A substitute check shall be the legal equivalent of the original check for all purposes, including any provision of any Federal or State law, and for all persons if the substitute check—
(1) accurately represents all of the information on the front and back of the original check as of the time the original check was truncated; and
(2) bears the legend: ‘‘This is a legal copy of your check. You can use it the same way you would use the original check.’’.
(c) ENDORSEMENTS.—A bank shall ensure that the substitute
check for which the bank is the reconverting bank bears all endorse- ments applied by parties that previously handled the check (whether in electronic form or in the form of the original paper check or a substitute check) for forward collection or return.
(d) IDENTIFICATION OF RECONVERTING BANK.—A bank shall identify itself as a reconverting bank on any substitute check for which the bank is a reconverting bank so as to preserve any
VerDate 11-MAY-2000
22:57 Oct 29, 2003 Jkt 029139 PO 00100 Frm 00005 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108
apps24
PsN: PUBL100
PUBLIC LAW 108–100—OCT. 28, 2003 117 STAT. 1181
previous reconverting bank identifications in conformance with gen- erally applicable industry standards.
(e) APPLICABLE LAW.—A substitute check that is the legal equivalent of the original check under subsection (b) shall be subject to any provision, including any provision relating to the protection of customers, of part 229 of title 12 of the Code of Federal Regula- tions, the Uniform Commercial Code, and any other applicable Federal or State law as if such substitute check were the original check, to the extent such provision of law is not inconsistent with this Act.
SEC. 5. SUBSTITUTE CHECK WARRANTIES.
A bank that transfers, presents, or returns a substitute check and receives consideration for the check warrants, as a matter of law, to the transferee, any subsequent collecting or returning bank, the depositary bank, the drawee, the drawer, the payee, the depositor, and any endorser (regardless of whether the war- rantee receives the substitute check or another paper or electronic form of the substitute check or original check) that—
(1) the substitute check meets all the requirements for legal equivalence under section 4(b); and
(2) no depositary bank, drawee, drawer, or endorser will receive presentment or return of the substitute check, the original check, or a copy or other paper or electronic version of the substitute check or original check such that the bank, drawee, drawer, or endorser will be asked to make a payment based on a check that the bank, drawee, drawer, or endorser has already paid.
SEC. 6. INDEMNITY.
(a) INDEMNITY.—A reconverting bank and each bank that subse- quently transfers, presents, or returns a substitute check in any electronic or paper form, and receives consideration for such transfer, presentment, or return shall indemnify the transferee, any subsequent collecting or returning bank, the depositary bank, the drawee, the drawer, the payee, the depositor, and any endorser, up to the amount described in subsections (b) and (c), as applicable, to the extent of any loss incurred by any recipient of a substitute check if that loss occurred due to the receipt of a substitute check instead of the original check.
(b) INDEMNITY AMOUNT.—
(1) AMOUNT IN EVENT OF BREACH OF WARRANTY.—The
amount of the indemnity under subsection (a) shall be the amount of any loss (including costs and reasonable attorney’s fees and other expenses of representation) proximately caused by a breach of a warranty provided under section 5.
(2) AMOUNT IN ABSENCE OF BREACH OF WARRANTY.—In the absence of a breach of a warranty provided under section 5, the amount of the indemnity under subsection (a) shall be the sum of—
(A) the amount of any loss, up to the amount of the substitute check; and
(B) interest and expenses (including costs and reason- able attorney’s fees and other expenses of representation).
(c) COMPARATIVE NEGLIGENCE.—
(1) IN GENERAL.—If a loss described in subsection (a) results
in whole or in part from the negligence or failure to act in good faith on the part of an indemnified party, then that
12 USC 5004.
12 USC 5005.
VerDate 11-MAY-2000
22:57 Oct 29, 2003
Jkt 029139
PO 00100 Frm 00006 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108 apps24 PsN: PUBL100
117 STAT. 1182
12 USC 5006.
PUBLIC LAW 108–100—OCT. 28, 2003
party’s indemnification under this section shall be reduced in proportion to the amount of negligence or bad faith attributable to that party.
(2) RULE OF CONSTRUCTION.—Nothing in this subsection reduces the rights of a consumer or any other person under the Uniform Commercial Code or other applicable provision of Federal or State law.
(d) EFFECT OF PRODUCING ORIGINAL CHECK OR COPY.—
(1) IN GENERAL.—If the indemnifying bank produces the original check or a copy of the original check (including an image or a substitute check) that accurately represents all of the information on the front and back of the original check (as of the time the original check was truncated) or is otherwise sufficient to determine whether or not a claim is valid, the indemnifying bank shall—
(A) be liable under this section only for losses covered by the indemnity that are incurred up to the time that the original check or copy is provided to the indemnified party; and
(B) have a right to the return of any funds it has paid under the indemnity in excess of those losses.
(2) COORDINATION OF INDEMNITY WITH IMPLIED WAR-
RANTY.—The production of the original check, a substitute check, or a copy under paragraph (1) by an indemnifying bank shall not absolve the bank from any liability on a warranty established under this Act or any other provision of law.
(e) SUBROGATION OF RIGHTS.—
(1) IN GENERAL.—Each indemnifying bank shall be sub-
rogated to the rights of any indemnified party to the extent of the indemnity.
(2) RECOVERY UNDER WARRANTY.—A bank that indemnifies a party under this section may attempt to recover from another party based on a warranty or other claim.
(3) DUTY OF INDEMNIFIED PARTY.—Each indemnified party shall have a duty to comply with all reasonable requests for assistance from an indemnifying bank in connection with any claim the indemnifying bank brings against a warrantor or other party related to a check that forms the basis for the indemnification.
SEC. 7. EXPEDITED RECREDIT FOR CONSUMERS.
(a) RECREDIT CLAIMS.—
(1) IN GENERAL.—A consumer may make a claim for expe-
dited recredit from the bank that holds the account of the consumer with respect to a substitute check, if the consumer asserts in good faith that—
(A) the bank charged the consumer’s account for a substitute check that was provided to the consumer;
(B) either—
(i) the check was not properly charged to the con-
sumer’s account; or
(ii) the consumer has a warranty claim with
respect to such substitute check;
(C) the consumer suffered a resulting loss; and
(D) the production of the original check or a better
copy of the original check is necessary to determine the validity of any claim described in subparagraph (B).
VerDate 11-MAY-2000
23:03 Oct 29, 2003 Jkt 019139 PO 00100 Frm 00007 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108 apps24 PsN: PUBL100
PUBLIC LAW 108–100—OCT. 28, 2003 117 STAT. 1183
(2) 40-DAY PERIOD.—Any claim under paragraph (1) with respect to a consumer account may be submitted by a consumer before the end of the 40-day period beginning on the later of—
(A) the date on which the financial institution mails or delivers, by a means agreed to by the consumer, the periodic statement of account for such account which con- tains information concerning the transaction giving rise to the claim; or
(B) the date on which the substitute check is made available to the consumer.
(3) EXTENSION UNDER EXTENUATING CIRCUMSTANCES.—If
the ability of the consumer to submit the claim within the 40-day period under paragraph (2) is delayed due to extenuating circumstances, including extended travel or the illness of the consumer, the 40-day period shall be extended by a reasonable amount of time.
(b) PROCEDURES FOR CLAIMS.—
(1) IN GENERAL.—To make a claim for an expedited recredit
under subsection (a) with respect to a substitute check, the consumer shall provide to the bank that holds the account of such consumer—
(A) a description of the claim, including an explanation of—
(i) why the substitute check was not properly charged to the consumer’s account; or
(ii) the warranty claim with respect to such check; (B) a statement that the consumer suffered a loss
and an estimate of the amount of the loss;
(C) the reason why production of the original check
or a better copy of the original check is necessary to deter- mine the validity of the charge to the consumer’s account or the warranty claim; and
(D) sufficient information to identify the substitute check and to investigate the claim.
(2) CLAIM IN WRITING.—
(A) IN GENERAL.—The bank holding the consumer account that is the subject of a claim by the consumer under subsection (a) may, in the discretion of the bank, require the consumer to submit the information required under paragraph (1) in writing.
(B) MEANS OF SUBMISSION.—A bank that requires a submission of information under subparagraph (A) may permit the consumer to make the submission electronically, if the consumer has agreed to communicate with the bank in that manner.
(c) RECREDIT TO CONSUMER.—
(1) CONDITIONS FOR RECREDIT.—The bank shall recredit
a consumer account in accordance with paragraph (2) for the amount of a substitute check that was charged against the consumer account if—
(A) a consumer submits a claim to the bank with respect to that substitute check that meets the requirement of subsection (b); and
(B) the bank has not—
(i) provided to the consumer—
(I) the original check; or
VerDate 11-MAY-2000
23:05 Oct 29, 2003
Jkt 029139
PO 00100
Frm 00008 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108 apps24 PsN: PUBL100
117 STAT. 1184
PUBLIC LAW 108–100—OCT. 28, 2003
(II) a copy of the original check (including an image or a substitute check) that accurately represents all of the information on the front and back of the original check, as of the time at which the original check was truncated; and
(ii) demonstrated to the consumer that the sub-
stitute check was properly charged to the consumer
account.
(2) TIMING OF RECREDIT.—
(A) IN GENERAL.—The bank shall recredit the con- sumer’s account for the amount described in paragraph (1) no later than the end of the business day following the business day on which the bank determines the con- sumer’s claim is valid.
(B) RECREDIT PENDING INVESTIGATION.—If the bank has not yet determined that the consumer’s claim is valid before the end of the 10th business day after the business day on which the consumer submitted the claim, the bank shall recredit the consumer’s account for—
(i) the lesser of the amount of the substitute check that was charged against the consumer account, or $2,500, together with interest if the account is an interest-bearing account, no later than the end of such 10th business day; and
(ii) the remaining amount of the substitute check that was charged against the consumer account, if any, together with interest if the account is an interest- bearing account, not later than the 45th calendar day following the business day on which the consumer submits the claim.
(d) AVAILABILITY OF RECREDIT.—
(1) NEXT BUSINESS DAY AVAILABILITY.—Except as provided
in paragraph (2), a bank that provides a recredit to a consumer account under subsection (c) shall make the recredited funds available for withdrawal by the consumer by the start of the next business day after the business day on which the bank recredits the consumer’s account under subsection (c).
(2) SAFEGUARD EXCEPTIONS.—A bank may delay availability to a consumer of a recredit provided under subsection (c)(2)(B)(i) until the start of either the business day following the business day on which the bank determines that the consumer’s claim is valid or the 45th calendar day following the business day on which the consumer submits a claim for such recredit in accordance with subsection (b), whichever is earlier, in any of the following circumstances:
(A) NEW ACCOUNTS.—The claim is made during the 30-day period beginning on the business day the consumer account was established.
(B) REPEATED OVERDRAFTS.—Without regard to the charge that is the subject of the claim for which the recredit was made—
(i) on 6 or more business days during the 6-month period ending on the date on which the consumer sub- mits the claim, the balance in the consumer account was negative or would have become negative if checks or other charges to the account had been paid; or
VerDate 11-MAY-2000
22:57 Oct 29, 2003 Jkt 029139 PO 00100 Frm 00009 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108 apps24 PsN: PUBL100
PUBLIC LAW 108–100—OCT. 28, 2003 117 STAT. 1185
(ii) on 2 or more business days during such 6- month period, the balance in the consumer account was negative or would have become negative in the amount of $5,000 or more if checks or other charges to the account had been paid.
(C) PREVENTION OF FRAUD LOSSES.—The bank has
reasonable cause to believe that the claim is fraudulent, based on facts (other than the fact that the check in ques- tion or the consumer is of a particular class) that would cause a well-grounded belief in the mind of a reasonable person that the claim is fraudulent.
(3) OVERDRAFT FEES.—No bank that, in accordance with paragraph (2), delays the availability of a recredit under sub- section (c) to any consumer account may impose any overdraft fees with respect to drafts drawn by the consumer on such recredited amount before the end of the 5-day period beginning on the date notice of the delay in the availability of such amount is sent by the bank to the consumer.
(e) REVERSAL OF RECREDIT.—A bank may reverse a recredit to a consumer account if the bank—
(1) determines that a substitute check for which the bank recredited a consumer account under subsection (c) was in fact properly charged to the consumer account; and
(2) notifies the consumer in accordance with subsection (f)(3).
(f) NOTICE TO CONSUMER.—
(1) NOTICE IF CONSUMER CLAIM NOT VALID.—If a bank
determines that a substitute check subject to the consumer’s claim was in fact properly charged to the consumer’s account, the bank shall send to the consumer, no later than the business day following the business day on which the bank makes a determination—
(A) the original check or a copy of the original check (including an image or a substitute check) that—
(i) accurately represents all of the information on the front and back of the original check (as of the time the original check was truncated); or
(ii) is otherwise sufficient to determine whether or not the consumer’s claim is valid; and
(B) an explanation of the basis for the determination
by the bank that the substitute check was properly charged, including a statement that the consumer may request copies of any information or documents on which the bank relied in making the determination.
(2) NOTICE OF RECREDIT.—If a bank recredits a consumer account under subsection (c), the bank shall send to the con- sumer, no later than the business day following the business day on which the bank makes the recredit, a notice of—
(A) the amount of the recredit; and
(B) the date the recredited funds will be available for withdrawal.
(3) NOTICE OF REVERSAL OF RECREDIT.—In addition to the notice required under paragraph (1), if a bank reverses a recred- ited amount under subsection (e), the bank shall send to the consumer, no later than the business day following the business day on which the bank reverses the recredit, a notice of—
(A) the amount of the reversal; and
VerDate 11-MAY-2000
22:57 Oct 29, 2003
Jkt 029139
PO 00100 Frm 00010 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108 apps24 PsN: PUBL100
117 STAT. 1186
Applicability. 12 USC 5007.
PUBLIC LAW 108–100—OCT. 28, 2003
(B) the date the recredit was reversed.
(4) MODE OF DELIVERY.—A notice described in this sub-
section shall be delivered by United States mail or by any other means through which the consumer has agreed to receive account information.
(g) OTHER CLAIMS NOT AFFECTED.—Providing a recredit in
accordance with this section shall not absolve the bank from liability for a claim made under any other law, such as a claim for wrongful dishonor under the Uniform Commercial Code, or from liability for additional damages under section 6 or 10.
(h) CLARIFICATION CONCERNING CONSUMER POSSESSION.—A consumer who was provided a substitute check may make a claim for an expedited recredit under this section with regard to a trans- action involving the substitute check whether or not the consumer is in possession of the substitute check.
(i) SCOPE OF APPLICATION.—This section shall only apply to customers who are consumers.
SEC. 8. EXPEDITED RECREDIT PROCEDURES FOR BANKS.
(a) RECREDIT CLAIMS.—
(1) IN GENERAL.—A bank may make a claim against an
indemnifying bank for expedited recredit for which that bank is indemnified if—
(A) the claimant bank (or a bank that the claimant bank has indemnified) has received a claim for expedited recredit from a consumer under section 7 with respect to a substitute check or would have been subject to such a claim had the consumer’s account been charged;
(B) the claimant bank has suffered a resulting loss or is obligated to recredit a consumer account under section 7 with respect to such substitute check; and
(C) production of the original check, another substitute check, or a better copy of the original check is necessary to determine the validity of the charge to the customer account or any warranty claim connected with such sub- stitute check.
(2) 120-DAY PERIOD.—Any claim under paragraph (1) may
be submitted by the claimant bank to an indemnifying bank before the end of the 120-day period beginning on the date of the transaction that gave rise to the claim.
(b) PROCEDURES FOR CLAIMS.—
(1) IN GENERAL.—To make a claim under subsection (a) for an expedited recredit relating to a substitute check, the claimant bank shall send to the indemnifying bank—
(A) a description of—
(i) the claim, including an explanation of why the
substitute check cannot be properly charged to the consumer account; or
(ii) the warranty claim;
(B) a statement that the claimant bank has suffered
a loss or is obligated to recredit the consumer’s account under section 7, together with an estimate of the amount of the loss or recredit;
(C) the reason why production of the original check, another substitute check, or a better copy of the original check is necessary to determine the validity of the charge to the consumer account or the warranty claim; and
VerDate 11-MAY-2000
22:57 Oct 29, 2003 Jkt 029139 PO 00100 Frm 00011 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL100.108
apps24
PsN: PUBL100
PUBLIC LAW 108–100—OCT. 28, 2003 117 STAT. 1187
(D) information sufficient for the indemnifying bank to identify the substitute check and to investigate the claim. (2) REQUIREMENTS RELATING TO COPIES OF SUBSTITUTE
CHECKS.—If the information submitted by a claimant bank pursuant to paragraph (1) in connection with a claim for an expedited recredit includes a copy of any substitute check for which any such claim is made, the claimant bank shall take reasonable steps to ensure that any such copy cannot be—
(A) mistaken for the legal equivalent of the check under section 4(b); or
(B) sent or handled by any bank, including the indem- nifying bank, as a forward collection or returned check. (3) CLAIM IN WRITING.—
(A) IN GENERAL.—An indemnifying bank may, in the discretion of the bank, require the claimant bank to submit the information required by paragraph (1) in writing, including a copy of the written or electronically submitted claim, if any, that the consumer provided in accordance with section 7(b).
(B) MEANS OF SUBMISSION.—An indemnifying