Time Limitation on Correcting Encoding Errors?

Answered by:

Question:

Is there a time limitation on correcting encoding errors on customer accounts?

Answer:

The encoding warranties under UCC 4-209(a) are subject to the time limitations on claims under UCC 4-111 (three years). There may be clearing house rules that impose a shorter time limit (and some states may include a different limit in their versions of the UCC). For example, Federal Reserve Bank Operating Circular 3 limits adjustment claims for dollar amount encoding errors to 6 months from the date of the check's cash letter, if the adjustment is to be handled through the Fed.

First published on BankersOnline.com 7/1/13