Banks handle many different forms of return items. There are incoming and outgoing returns, ACH items of several types, images, and yes, even the occasional paper check! Each return item has to be handled correctly and within time constraints. Whether your bank will be sending or receiving one of these items, you need to know how to handle it, what your options are, and what the repercussions might be if a return is mishandled. It's all about correctly serving your customers and protecting your bank from losses. This presentation will help you make the right return item decisions.
A customer calls to stop payment on a check on his account. You look the check up and see that it was presented yesterday as an in-clearing item. Is the stop payment timely, and can you return the check?
How should you return a check drawn on an account that has been attached by a creditor?
You received a check returned for insufficient funds, but not until three weeks after your customer deposited it with you. Who is at fault?
Can you return a check that your customer claims was never authorized if, instead of a signature, the words "Authorized by your customer, no signature required" appear?
Last week, one of your customers deposited a cashier's check drawn on another bank. The check has now been returned to your bank stamped "stop payment." What should you do? Would your options change if the check was four months old when it was deposited?
Who's liable if your business customer claims that she's found 15 checks on her account that she thinks were forged by her office manager six months ago?
Handling return items at the paying bank is a lot more than reviewing the overdraft lists for checks to be returned. There are stop payments, remotely created checks, checks presented both in paper and ACH format, and checks presented for payment as electronic images. That's the routine stuff! You need to know the legal framework for your bank's liability for paying altered or unauthorized checks, too.
Depositary banks must deal with items that have been returned unpaid. Do they have to notify their customers of the unpaid items, and how soon? Are there items that the bank should not charge back? If the returns weren't handled properly by the paying banks, what should the depositary bank do about it?
In this presentation, we'll look at each of the major forms that items can take and provide solutions to help your institution handle returns of those items efficiently. We won't dwell on every detail, but we will cover the essentials for returns of paper checks, ACH items, electronically-presented check images, etc. As we do that, we'll be discussing:
standard return reasons
the "midnight deadline" and which return items must meet it
adopting a "cutoff hour" for stop payments
warranties by returning banks
unauthorized drafts vs. "buyer's remorse"
expeditious methods for return
returns of ACH items
providing notice to the depositary bank of large dollar return items
returning items "with entry"
returning items "without entry;" i.e., "bank to bank"
when the other bank refuses: alternatives to "without entry" returns
a sample letters for "bank to bank" returns
a sample affidavit of forgery or alteration
a sample "unauthorized" affidavit for remotely created checks
a way to handle duplicate payments
defenses against returns of "unauthorized" remotely created checks
advising depositors of returned items
re-presenting return items
clearinghouse rules affecting forged check claims
sample contract addendum for acceptance of remotely created checks
WHO SHOULD ATTEND:
Operations and customer service staff who handle items, Audit
John Burnett is a 1979 alumnus of the ABA National Compliance School, and served on its faculty for several years. He graduated with honors with the Class of 1990 from ABA's Stonier Graduate School of Banking, and is also a graduate of the BAIs and the Massachusetts Banker Associations Schools of Banking.John began his banking career in high school when he started as a teller at a $15 million bank that didn't have account numbers for its checking accounts (he says they actually filed by signature!) He joined Cape Cod Bank and Trust Company in 1971 and assumed the position of Compliance Officer in 1976. He also served as corporate secretary and secretary of CCBT's Board of Directors, as well as Clerk of the bank's holding company. John joined Glia Group, Inc. and the BankersOnline.com team in June, 2004. He is a frequent presenter of BOL Learning Connect webinars, and at BOL Conferences events.He was a member of the Massachusetts Bankers Association Legal and Regulatory Compliance Committee, and a former member of the American Bankers Association Compliance Executive Committee and NCS/NGCS Advisory Board. He served on ABA's Truth in Savings Task Force as Regulation DD was being written, and has served on several ABA and Massachusetts Bankers seminar panels.