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CFPB and Fed issue final amendments to Regulation CC
On June 24, the CFPB and the Federal Reserve Board (Fed) announced a final rule amending Regulation CC to adjust dollar amounts cited in the rule for inflation. The Dodd-Frank Act requires that the dollar amounts be adjusted for inflation every five years by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The agencies selected July as the CPI-W month and will use July 2011 to July 2018 as the initial inflation measurement period. If there is no aggregate percentage increase in the CPI-W or it is negative, the dollar amounts will not be adjusted. The final rule also implements certain measures of the Economic Growth, Regulatory Relief, and Consumer Protection Act , including extending coverage of the Expedited Funds Availability Act to American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam.
The compliance date for the adjustment amounts is July 1, 2020. Other amendments are effective 60 days after publication in the Federal Register.
Federal Reserve revises exam procedures for Regulation CC
On October 17, the Federal Reserve Board issued CA 18-8, which announces revised interagency examination procedures for Regulation CC, the implementing regulation to the Expedited Funds Availability Act. The revised procedures reflect amendments to Regulation CC that were effective on July 1, which, among other things (i) creates a framework for electronic check collection and return; (ii) establishes certain indemnities for electronically-created checks; (iii) applies traditional-check-equivalent warranties to electronic checks; and (iv) modifies the requirements for the expeditious return of checks and expeditious-return liability. The revised procedures also incorporate amendments from the Economic Growth, Regulatory Relief, and Consumer Protection Act. CA 18-8 supersedes the examination procedures referenced in CA 04-9, “Revised Regulation CC Examination Procedures - Check Clearing for the 21st Century.”
Federal Reserve Board approves final amendments to Regulation CC
On September 12, the Federal Reserve Board (Board) announced the final amendments to the liability provisions of Regulation CC. The final amendments, which were proposed in June 2017, update Regulation CC’s existing liability provisions to include a presumption that a substitute or electronic check was altered in the event of disputes over whether a check has been altered or was issued with an unauthorized signature when the original check is not available. The presumption is only applicable to disputes between banks when one bank has transferred an electronic or substitute check to the other bank. The amendments are effective January 1, 2019.
Federal Reserve Announces Updates to Regulation CC Regarding Electronic Checks
On May 31, the Board of Governors of the Federal Reserve System (Board) announced final amendments to the check collection and return provisions in Regulation CC, Availability of Funds and Collection of Checks, which implements the Expedited Funds Availability Act of 1987, the Check Clearing for the 21st Century Act of 2003 and the official staff commentary of the regulation. The amendments update Regulation CC “to reflect the evolution of the nation's check collection system from one that is largely paper-based to one that is virtually all electronic.” The Board (i) retained the current same-day settlement rule for paper checks; (ii) applied Regulation CC’s existing check warranties to check that are collected electronically; and (iii) adopted new warranties and indemnities related to checks collected and returned electronically and to electronically-created items.
In addition to the final rule, the Board also requested comments on proposed language amending Regulation CC's existing liability provisions to include a presumption that a substitute or electronic check was altered instead of forged in the event of a dispute under federal or state law in the absence of evidence such as the original check. Comments on the proposed amendments are requested within 60 days of publication in the Federal Register.