12 USC 4003 - Safeguard exceptions

U.S Code last checked for updates: Nov 22, 2024

§ 4003.

Safeguard exceptions

(a)

New accounts

Notwithstanding section 4002 of this title, in the case of any account established at a depository institution by a new depositor, the following provisions shall apply with respect to any deposit in such account during the 30-day period (or such shorter period as the Board, jointly with the Director of the Bureau of Consumer Financial Protection, may establish) beginning on the date such account is established—

(1)

Next business day availability of cash and certain items

Except as provided in paragraph (3), in the case of—

(A)

any cash deposited in such account;

(B)

any funds received by such depository institution by wire transfer for deposit in such account;

(C)

any funds deposited in such account by cashier’s check, certified check, teller’s check, depository check, or traveler’s check; and

(D)

any funds deposited by a government check which is described in subparagraph (A), (B), or (C) of section 4002(a)(2) of this title,

such cash or funds shall be available for withdrawal on the business day after the business day on which such cash or funds are deposited or, in the case of a wire transfer, on the business day after the business day on which such funds are received for deposit.

(2)

Availability of other items

(3)

Limitation relating to certain checks in excess of $5,000

In the case of funds deposited in such account during such period by checks described in subparagraph (C) or (D) of paragraph (1) the aggregate amount of which exceeds $5,000—

(A)

paragraph (1) shall apply only with respect to the first $5,000 of such aggregate amount; and

(B)

not more than 8 business days shall intervene between the business day on which any such funds are deposited and the business day on which such excess amount shall be available for withdrawal.

(b)

Large or redeposited checks; repeated overdrafts

The Board, jointly with the Director of the Bureau of Consumer Financial Protection, may, by regulation, establish reasonable exceptions to any time limitation established under subsection (a)(2), (b), (c), or (e) of section 4002 of this title for—

(1)

the amount of deposits by one or more checks that exceeds the amount of $5,000 in any one day;

(2)

checks that have been returned unpaid and redeposited; and

(3)

deposit accounts which have been overdrawn repeatedly.

(c)

Reasonable cause exception

(1)

In general

(2)

Basis for determination

(3)

Overdraft fees

If the receiving depository institution determines that a check deposited in an account is a check described in paragraph (1), the receiving depository institution shall not assess any fee for any subsequent overdraft with respect to such account, if—

(A)

the depositor was not provided with the written notice required under subsection (f) (with respect to such determination) at the time the deposit was made;

(B)

the overdraft would not have occurred but for the fact that the funds so deposited are not available; and

(C)

the amount of the check is collected from the originating depository institution.

(4)

Compliance

(d)

Emergency conditions

Subject to such regulations as the Board, jointly with the Director of the Bureau of Consumer Financial Protection, may prescribe, subsections (a)(2), (b), (c), and (e) of section 4002 of this title shall not apply to funds deposited by check in any receiving depository institution in the case of—

(1)

any interruption of communication facilities;

(2)

suspension of payments by another depository institution;

(3)

any war; or

(4)

any emergency condition beyond the control of the receiving depository institution,

if the receiving depository institution exercises such diligence as the circumstances require.

(e)

Prevention of fraud losses

(1)

In general

The Board, jointly with the Director of the Bureau of Consumer Financial Protection, may, by regulation or order, suspend the applicability of this chapter, or any portion thereof, to any classification of checks if the Board, jointly with the Director of the Bureau of Consumer Financial Protection, determines that—

(A)

depository institutions are experiencing an unacceptable level of losses due to check-related fraud, and

(B)

suspension of this chapter, or such portion of this chapter, with regard to the classification of checks involved in such fraud is necessary to diminish the volume of such fraud.

(2)

Sunset provision

(3)

Report to Congress

(A)

Notice of each suspension

(B)

Contents of report

Each report under subparagraph (A) shall contain—

(i)

the specific reason for prescribing the regulation or issuing the order;

(ii)

evidence considered by the Board, jointly with the Director of the Bureau of Consumer Financial Protection, in making the determination under paragraph (1) with respect to such regulation or order; and

(iii)

specific examples of the check-related fraud giving rise to such regulation or order.

(f)

Notice of exception; availability within reasonable time

(1)

In general

If any exception contained in this section (other than subsection (a)) applies with respect to funds deposited in an account at a depository institution—

(A)

the depository institution shall provide notice in the manner provided in paragraph (2) of—

(i)

the time period within which the funds shall be made available for withdrawal; and

(ii)

the reason the exception was invoked; and

(B)

except where other time periods are specifically provided in this chapter, the availability of the funds deposited shall be governed by the policy of the receiving depository institution, but shall not exceed a reasonable period of time as determined by the Board, jointly with the Director of the Bureau of Consumer Financial Protection.

(2)

Time for notice

The notice required under paragraph (1)(A) with respect to a deposit to which an exception contained in this section applies shall be made by the time provided in the following subparagraphs:

(A)

In the case of a deposit made in person by the depositor at the receiving depository institution, the depository institution shall immediately provide such notice in writing to the depositor.

(B)

In the case of any other deposit (other than a deposit described in subparagraph (C)), the receiving depository institution shall mail the notice to the depositor not later than the close of the next business day following the business day on which the deposit is received.

(C)

In the case of a deposit to which subsection (d) or (e) applies, notice shall be provided by the depository institution in accordance with regulations of the Board, jointly with the Director of the Bureau of Consumer Financial Protection.

(D)

In the case of a deposit to which subsection (b)(1) or (b)(2) applies, the depository institution may, for nonconsumer accounts and other classes of accounts, as defined by the Board, that generally have a large number of such deposits, provide notice at or before the time it first determines that the subsection applies.

(E)

In the case of a deposit to which subsection (b)(3) applies, the depository institution may, subject to regulations of the Board, provide notice at the beginning of each time period it determines that the subsection applies. In addition to the requirements contained in paragraph (1)(A), the notice shall specify the time period for which the exception will apply.

(3)

Subsequent determinations

(Pub. L. 100–86, title VI, § 604,

cite as: 12 USC 4003