Reg CC Subpart C-collection Of Checks

Question 1

A paying bank returns a check such that the check would normally be received by the depository bank no later than 2pm on second business day following banking day of presentment.

Answer 1

Expeditious return

Question 2

When is a notice of nonpayment required?

Answer 2

If returned item is equal/greater than $5000.
Note: return can satisfy the Notification if return expeditiously.

Question 3

What is UCC’s return requirement?

Answer 3

Midnight

Question 4

What is Reg CC return requirement?

Answer 4

Expeditious time frame

Question 5

What can a paying bank do if they are unable to identify the depository bank?

Answer 5

May send return check to any bank that handled check for forward collection.
Note: Paying bank must advise that they were unable to identify BOFD. Expeditious return requirements do not apply.

Question 6

What is notice in lieu (NIL) of return?

Answer 6

When check is unavailable for return,may send:
Copy of front/bank of check and
Written notice of nonpayment containing the information

Question 7

Bank other than paying or depositary bank, that handles a returned check or notice in lieu of return?

Answer 7

Returning bank
Reg CC definition

Question 8

Depositary Bank must notify there customer of the return by?

Answer 8

Midnight of the banking day following the banking day on which it received the return check or notice or within a longer reasonable time

Question 9

Return check/written notice of nonpayment received in error

Answer 9

Misrouted return check

Question 10

Burden of proof of late claim for certain non electronic returns falls on who?

Answer 10

Depositary bank asserting claim

Question 11

List Reg CC warranties and indemnities

Answer 11

-Electronic checks/electronic returned checks
-Transfer & Presentment of remotely created checks
-settlement amount,encoding,and offset
-returned check/notice of nonpayment
-RDC Indemnity
-ECI Indemnity
-Substitute checks

Question 12

Assurance that certain conditions will be met?

Answer 12

Warranty

Question 13

Promise to reimburse a person for a loss they suffer
Aka. Promise of protection

Answer 13

Indemnity

Question 14

Electronic check

Answer 14

Electronic image that accurately represents information on front and back of original check (at time check was truncated).
Must include accurate record of MIRC line and amount of check

Question 15

Return warranty 229.34 (d)

Answer 15

Paying bank/returning bank:
-return within UCC midnight deadline
-authorized to return check
-check not materially altered
-for notice in lieu of return, original check has not and will not be returned.

Question 16

Return warranties can not be made for which type of checks?

Answer 16

-drawn on US Treasury
-US Postal service money order, or
-drawn on state or a unit of general local government that are not payable through or at a bank

Question 17

Notice of nonpayment warrant 229.34(e)

Answer 17

Paying bank returning a check $5,000 or greater must provide notice, and warrants:
-check is and will be returned within the UCC deadline
-authorized to send notice,and
-check has not been materially altered

Question 18

Settlement amount,encoding,and offset warranty 229.34(c)

Answer 18

Presenting bank:
-total amount of checks presented equal total total settlement demanded
-accompanying info accurately indicates total amount of checks
-info encoded in magnetic ink is correct. Includes any info in MIRC line of substitute check.

Question 19

Remotely Created Check warranty 229.34(b)

Answer 19

Bank that transfers or presents a remotely created check:
-person on whose account the check is drawn on authorized issuance of the item, in the amount stated on the check and to the payee on the check

Question 20

Difference between remotely created check and ECI?

Answer 20

Remotely created check started as a paper check whereas ECI item did not.

Question 21

No person will receive a transfer, presentment,or return of, or otherwise be charged for an electronic check or electronic return check, the original, a substitute, or paper or electronic representation of a substitute such that the person will be asked to make payment based on a check it has already paid.

Answer 21

No double debit warranty aka duplicate warranty

Question 22

Bank that truncates a original check or accepts a truncated image for transfer,presentment, or returns of original item or substitute check

Answer 22

Truncating Bank
Reg CC 229.2(eee)(2)

Question 23

Truncating bank indemnify a depositary bank that accepts the original check for deposit for losses incurred by that depositary bank if the loss is due to the check having already been paid and original item didn’t bore a restrictive endorsement.

Answer 23

RDC Indemnity
Reg CC 229.34(f)

Question 24

RDC indemnity happens between what two banks?

Answer 24

Only between both BOFD.

Question 25

Shall not exceed amount of item plus interest compensation and expenses related to item if any.

Answer 25

Breach of warranty damages
Reg CC 229.34(h)

Question 26

May give prior bank in collection or return chain written notice of litigation

Answer 26

Breach of warranty tender of defense
Reg CC 229.34(j)

Question 27

Must be made within 30 days after claimant has reason to know of breach and identity of warranting bank then
Warranting bank discharges to the extent of any loss caused by the delay in giving notice of the claim.

Answer 27

Notice of claim 229.34 (k)

Question 28

Designed to prevent fraudulent/stale claims from arising after all evidence lost or after facts have become obscure through passage of time.
(One year)

Answer 28

Statute of limitations
Reg CC (229.38)