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#199816 - 06/14/04 01:45 PM
CAN ANYONE EXPLAIN WHY?
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Anonymous
Unregistered
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I know this has been discussed in previous threads, but I was wondering if anyone can provide some background information...
From what I understand, if a customer suffers a loss in connection with a substitute check, they can exercise their recredit rights ONLY if they actually received the ORIGINAL substitute check.
Why is it that? Why wouldn't they be able to exercise the same rights when they suffer a loss, but only receive an imaged copy of a substitute check?? It's not the customer's fault they couldn't get their hands on the original.
What was the Fed's reasoning for this? Am I missing something?
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#199818 - 06/14/04 04:55 PM
Re: CAN ANYONE EXPLAIN WHY?
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Anonymous
Unregistered
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Quote:
Interesting issue.
This is posted on BOL:
The expedited recrediting procedure does not apply if the customer receives the original check or an image or a mere copy of an image (rather than a substitute check, which is a paper reproduction that is the legal equivalent of the original).
Therefore, in appears that if an IRD is not involved, the customer will not have additional coverage under Reg CC relating to double posts, etc.
If the customer does not receive a substitute check (or if their problem isn't a "substitute check problem", or if they are a commercial, rather than consumer customer), you are exactly right. The expedited recrediting rights and procedures under Subpart D of Reg CC will not apply.
What does this mean exactly? It means that the procedures and timelines for resolving whatever the problem is will be set by the financial institution, instead of a regulation. The situation is much the same today if, for example, Customer A reports that a check he wrote was altered before payment, the timeframe for investigating the claim, communicating the outcome, and recrediting the account, if warranted, is all set by the bank, subject to a general reasonableness standard.
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#199820 - 06/14/04 05:59 PM
Re: CAN ANYONE EXPLAIN WHY?
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Anonymous
Unregistered
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Quote:
Sounds right, Guru MBG, but can you tell us why the recredit right was created for IRD 'checks' and not real checks or images of real checks? It seems like the right should not have been incorporated or, perhaps, extended to real checks and images of real checks within the same recredit scenarios. The consumer may end up more confused than bankers.
I chalk it up as being an example of some sort of bizarre legislative compromise between consumer and industry groups.
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#199822 - 06/14/04 08:01 PM
Re: CAN ANYONE EXPLAIN WHY?
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Anonymous
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Thanks also. I had a feeling it all boiled down to compromise.
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#199823 - 06/17/04 03:34 PM
Re: CAN ANYONE EXPLAIN WHY?
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Diamond Poster
Joined: Jun 2001
Posts: 1,373
Lido Deck
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I attended a Check 21 seminar this week and this same question came up. The response was that first, Check 21 ONLY deals with substitute checks. Imaging is not covered by Check 21. So, while it seems this should be something applied across the board, the Check 21 law and reg only apply to substitute checks. Secondly, this was done to appease the consumer groups who applied pressure to have some sort of consumer recourse greater than what is currently available under the UCC.
The idea behind this being that a customer agrees to the requirements (or lack thereof) of UCC via account agreement. However, the consumer is not given the opportunity to agree to receive a substitute check so they should be provided greater protection than the UCC provides.
_________________________
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