[Code of Federal Regulations]

[Title 12, Volume 3]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR229.55]



[Page 571-572]

 

                       TITLE 12--BANKS AND BANKING

 

                   CHAPTER II--FEDERAL RESERVE SYSTEM

 

PART 229_AVAILABILITY OF FUNDS AND COLLECTION OF CHECKS (REGULATION CC)

--Table of Contents

 

                       Subpart D_Substitute Checks

 

Sec. 229.55  Expedited recredit for banks.



    (a) Circumstances giving rise to a claim. A bank that has an 

indemnity claim under Sec. 229.53 with respect to a substitute check 

may make an expedited recredit claim against an indemnifying bank if--

    (1) The claimant bank or a bank that the claimant bank has 

indemnified--

    (i) Has received a claim for expedited recredit from a consumer 

under Sec. 229.54; or

    (ii) Would have been subject to such a claim if the consumer account 

had been charged for the substitute check;

    (2) The claimant bank is obligated to provide an expedited recredit 

with respect to such substitute check under Sec. 229.54 or otherwise 

has suffered a resulting loss; and

    (3) The production of the original check or a sufficient copy is 

necessary to determine the validity of the charge to the consumer 

account or the validity of any warranty claim connected with such 

substitute check.

    (b) Procedures for making claims. A claimant bank shall send its 

claim to the indemnifying bank, subject to the timing, content, and form 

requirements of this section.

    (1) Timing of claim. The claimant bank shall submit its claim such 

that the indemnifying bank receives the claim by the end of the 120th 

calendar day after the date of the transaction that gave rise to the 

claim.

    (2) Content of claim. The claimant bank's claim shall include the 

following information--

    (i) A description of the consumer's claim or the warranty claim 

related to the substitute check, including why the bank believes that 

the substitute check may not be properly charged to the consumer 

account;

    (ii) A statement that the claimant bank is obligated to recredit a 

consumer account under Sec. 229.54 or otherwise has suffered a loss and 

an estimate of the amount of that recredit or loss, including interest 

if applicable;

    (iii) The reason why production of the original check or a 

sufficient copy is necessary to determine the validity of the charge to 

the consumer account or the warranty claim; and

    (iv) Sufficient information to allow the indemnifying bank to 

identify the substitute check and investigate the claim.

    (3) Requirements relating to copies of substitute checks. If the 

information submitted by a claimant bank under paragraph (b)(2) of this 

section includes a copy of any substitute check, the claimant bank shall 

take reasonable steps to ensure that the copy cannot be mistaken for the 

legal equivalent of the check under Sec. 229.51(a) or sent or



[[Page 572]]



handled by any bank, including the indemnifying bank, for forward 

collection or return.

    (4) Form and submission of claim; computation of time. The 

indemnifying bank may, in its discretion, require the claimant bank to 

submit the information required by this section in writing, including a 

copy of the paper or electronic claim submitted by the consumer, if any. 

An indemnifying bank that requires a written submission--

    (i) May permit the claimant bank to submit the written claim 

electronically;

    (ii) Shall inform a claimant bank that submits a claim orally of the 

written claim requirement at the time of the oral claim; and

    (iii) Shall compute the 10-day time period for acting on the claim 

described in paragraph (c) of this section from the date on which the 

bank received the written claim.

    (c) Action on claims. No later than the 10th business day after the 

banking day on which the indemnifying bank receives a claim that meets 

the requirements of paragraph (b) of this section, the indemnifying bank 

shall--

    (1) Recredit the claimant bank for the amount of the claim, up to 

the amount of the substitute check, plus interest if applicable;

    (2) Provide to the claimant bank the original check or a sufficient 

copy; or

    (3) Provide information to the claimant bank regarding why the 

indemnifying bank is not obligated to comply with paragraph (c)(1) or 

(c)(2) of this section.

    (d) Recredit does not abrogate other liabilities. Providing a 

recredit to a claimant bank under this section does not absolve the 

indemnifying bank from liability for claims brought under any other law 

or from additional damages under Sec. 229.53 or Sec. 229.56.

    (e) Indemnifying bank's right to a refund. (1) If a claimant bank 

reverses a recredit it previously made to a consumer account under Sec. 

229.54 or otherwise receives reimbursement for a substitute check that 

formed the basis of its claim under this section, the claimant bank 

shall provide a refund promptly to any indemnifying bank that previously 

advanced funds to the claimant bank. The amount of the refund to the 

indemnifying bank shall be the amount of the reversal or reimbursement 

obtained by the claimant bank, up to the amount previously advanced by 

the indemnifying bank.

    (2) If the indemnifying bank provides the claimant bank with the 

original check or a sufficient copy under paragraph (c)(2) of this 

section, Sec. 229.53(b)(3) governs the indemnifying bank's entitlement 

to repayment of any amount provided to the claimant bank that exceeds 

the amount of losses the claimant bank incurred up to that time.