12 USC 5007 - Expedited recredit procedures for banks

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

§ 5007.

Expedited recredit procedures for banks

(a)

Recredit claims

(1)

In general

A bank may make a claim against an indemnifying bank for expedited recredit for which that bank is indemnified if—

(A)

the claimant bank (or a bank that the claimant bank has indemnified) has received a claim for expedited recredit from a consumer under section 5006 of this title with respect to a substitute check or would have been subject to such a claim had the consumer’s account been charged;

(B)

the claimant bank has suffered a resulting loss or is obligated to recredit a consumer account under section 5006 of this title with respect to such substitute check; and

(C)

production of the original check, another substitute check, or a better copy of the original check is necessary to determine the validity of the charge to the customer account or any warranty claim connected with such substitute check.

(2)

120-day period

(b)

Procedures for claims

(1)

In general

To make a claim under subsection (a) for an expedited recredit relating to a substitute check, the claimant bank shall send to the indemnifying bank—

(A)

a description of—

(i)

the claim, including an explanation of why the substitute check cannot be properly charged to the consumer account; or

(ii)

the warranty claim;

(B)

a statement that the claimant bank has suffered a loss or is obligated to recredit the consumer’s account under section 5006 of this title, together with an estimate of the amount of the loss or recredit;

(C)

the reason why production of the original check, another substitute check, or a better copy of the original check is necessary to determine the validity of the charge to the consumer account or the warranty claim; and

(D)

information sufficient for the indemnifying bank to identify the substitute check and to investigate the claim.

(2)

Requirements relating to copies of substitute checks

If the information submitted by a claimant bank pursuant to paragraph (1) in connection with a claim for an expedited recredit includes a copy of any substitute check for which any such claim is made, the claimant bank shall take reasonable steps to ensure that any such copy cannot be—

(A)

mistaken for the legal equivalent of the check under section 5003(b) of this title; or

(B)

sent or handled by any bank, including the indemnifying bank, as a forward collection or returned check.

(3)

Claim in writing

(A)

In general

(B)

Means of submission

(c)

Recredit by indemnifying bank

(1)

Prompt action required

No later than 10 business days after the business day on which an indemnifying bank receives a claim under subsection (a) from a claimant bank with respect to a substitute check, the indemnifying bank shall—

(A)

provide, to the claimant bank, the original check (with respect to such substitute check) or a copy of the original check (including an image or a substitute check) that—

(i)

accurately represents all of the information on the front and back of the original check (as of the time the original check was truncated); or

(ii)

is otherwise sufficient to determine the bank’s claim is not valid; and

(B)

recredit the claimant bank for the amount of the claim up to the amount of the substitute check, plus interest if applicable; or

(C)

provide information to the claimant bank as to why the indemnifying bank is not obligated to comply with subparagraph (A) or (B).

(2)

Recredit does not abrogate other liabilities

(3)

Refund to indemnifying bank

(d)

Production of original check or a sufficient copy governed by section 5005(d)

(Pub. L. 108–100, § 8, Oct. 28, 2003, 117 Stat. 1186.)

cite as: 12 USC 5007