2015 National NCP Day - ECCHO NCP Day 2015 PPT...A Banker’s Guide to Checks, Principles of Banking, and Remote Deposit Capture Practical Considerations. Clarifying UCC Paul Carrubba,
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NOTICES This webinar may provide an introduction to or summary of various aspects of check payments and the legal and rules framework for check image exchange. Responsibility for compliance with image exchange rules, and/or the legal, operational and regulatory requirements applicable to check image exchange, remains at all times with the financial institution participating in check image exchange and/or the individual or company using a check image exchange service. This presentation and the information contained herein is not intended as legal or compliance advice or recommendation to any person or company. This presentation could include technical inaccuracies or typographical errors and individual users are responsible for verifying any information found in this presentation and related “live” webinar or webinar playback. Financial institutions should consult with their legal counsel regarding legal and operational requirements applicable to any check image exchange program they may offer or in which they participate. The content for questions provided in this presentation were provided by NCPs and edited by ECCHO. The answers to questions/comments/opinions expressed herein are not necessarily those of ECCHO.
• UCC is Difficult for Most to Understand –Both the language and concepts are
complicated
• Each year NCP registrants find studying for UCC challenging
• That is why we selected UCC as the subject for the NCP Day CE session
• We are very grateful to Paul Carrubba for speaking to us today
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Paul Carrubba, Attorney
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Paul has more than 43 years of experience in the financial services industry as a bank operations manager, consultant, author and attorney.
Paul has served as an expert witness in numerous cases on issues dealing with reasonable standards in the banking industry.
Paul frequently speaks at industry conferences across the U.S.
Paul’s experience includes:
• 20 years as SVP and Manager of Operations at a regional bank • 8 years at a leading payments software/consulting firm • Taught at the Alabama & Mississippi Schools of Banking • Taught at BAI’s Graduate School of Banking Operations and
Technology • Served on Board of Directors at NACHA • The author of six books including: Revised UCC Article 3 and 4,
A Banker’s Guide to Checks, Principles of Banking, and Remote Deposit Capture Practical Considerations.
Clarifying UCC
Paul Carrubba, Partner, Adams and Reese, LLP
NOTICES This webinar may provide an introduction to or summary of various aspects of check payments and the legal and rules framework for check image exchange. Responsibility for compliance with image exchange rules, and/or the legal, operational and regulatory requirements applicable to check image exchange, remains at all times with the financial institution participating in check image exchange and/or the individual or company using a check image exchange service. This presentation and the information contained herein is not intended as legal or compliance advice or recommendation to any person or company. This presentation could include technical inaccuracies or typographical errors and individual users are responsible for verifying any information found in this presentation and related “live” webinar or webinar playback. Financial institutions should consult with their legal counsel regarding legal and operational requirements applicable to any check image exchange program they may offer or in which they participate. The content for questions provided in this presentation were provided by NCPs and edited by ECCHO. The answers to questions/comments/opinions expressed herein are not necessarily those of ECCHO.
• What is ordinary care? How does it differ for different geographies, types of financial institutions, etc? How has it evolved over the last few years?
• Why is ordinary care important to a financial institution?
• Lawsuit examples
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Warranties vs. Indemnities
• What is the difference between a warranty and an indemnity?
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Transfer vs. Presentment Warranty
What is the difference between UCC transfer warranties and UCC presentment warranties?
• Why do transfer warranties say “warrants that all signatures are authentic and authorized” and presentment warranties say “the warrantor has no knowledge that the signature is not authorized”?
– Isn’t that a different standard?
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Statute of Limitations
• The UCC contains provisions for statute of limitation and for statute of repose. What is the difference?
• One year versus three years—why?
• Which one prevails or when to use each?
• Can you change the timeframes by agreement?
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Holder vs. Holder in Due Course
• We have heard much about Holder in Due Course (HIDC) claims due to duplicate issues and claims from outside the financial system
–What is the difference between Holder and HIDC?
–What rights do each have?
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Potential HIDC Claim A check presented for payment by BOFD A on 5/1/14 and was paid. A duplicate item was received from BOFD B on 5/20/15 and was paid.
Because the adjustments deadline has passed for the BOFD A item, paying bank can only go back to BOFD B. If BOFD B or their customer has the paper item and is HIDC, what can paying bank do to get their money back from either BOFD?
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Altered Item Affidavits
Do you have any advice on submitting air-tight altered item affidavits?
The other institution insists the item was forged instead of altered (“the maker’s signature has been tampered with and therefore, this is a forged maker issue, making the paying bank liable”). However our customer says that the payee/amount was altered but the signature was theirs.
Is there any avenue you can suggest once the denial has come back?
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Improper Breach of Warranty Claims
Can you please explain the correct process for filing a breach of warranty collections claim?
(Rather than charging an item back or submitting adjustment for a breach of warranty (alterations, endorsements))
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Responsibility for Counterfeit/Forged
Could you explain the paying bank’s liabilities under UCC for counterfeit/forged maker items? Does the ultimate liability remain with the paying bank despite Rule 9?
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RDC Issues
Can financial institutions print ‘Not for Mobile Deposit’ on the face of the checks they issue? Can you discuss things that financial institutions can do to help fight against RDC duplicates/fraudulent redeposit of items?
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Official Checks
• Can I put a stop pay on an official check?
–Cashier’s checks –Teller’s checks
• Can you please discuss how official checks are created/issued and who has liability if they are lost or stolen?
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