12 USC 5006 - Expedited recredit for consumers

U.S Code last checked for updates: May 02, 2024

§ 5006.

Expedited recredit for consumers

(a)

Recredit claims

(1)

In general

A consumer may make a claim for expedited recredit from the bank that holds the account of the consumer with respect to a substitute check, if the consumer asserts in good faith that—

(A)

the bank charged the consumer’s account for a substitute check that was provided to the consumer;

(B)

either—

(i)

the check was not properly charged to the consumer’s account; or

(ii)

the consumer has a warranty claim with respect to such substitute check;

(C)

the consumer suffered a resulting loss; and

(D)

the production of the original check or a better copy of the original check is necessary to determine the validity of any claim described in subparagraph (B).

(2)

40-day period

Any claim under paragraph (1) with respect to a consumer account may be submitted by a consumer before the end of the 40-day period beginning on the later of—

(A)

the date on which the financial institution mails or delivers, by a means agreed to by the consumer, the periodic statement of account for such account which contains information concerning the transaction giving rise to the claim; or

(B)

the date on which the substitute check is made available to the consumer.

(3)

Extension under extenuating circumstances

(b)

Procedures for claims

(1)

In general

To make a claim for an expedited recredit under subsection (a) with respect to a substitute check, the consumer shall provide to the bank that holds the account of such consumer—

(A)

a description of the claim, including an explanation of—

(i)

why the substitute check was not properly charged to the consumer’s account; or

(ii)

the warranty claim with respect to such check;

(B)

a statement that the consumer suffered a loss and an estimate of the amount of the loss;

(C)

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

(D)

sufficient information to identify the substitute check and to investigate the claim.

(2)

Claim in writing

(A)

In general

(B)

Means of submission

(c)

Recredit to consumer

(1)

Conditions for recredit

The bank shall recredit a consumer account in accordance with paragraph (2) for the amount of a substitute check that was charged against the consumer account if—

(A)

a consumer submits a claim to the bank with respect to that substitute check that meets the requirement of subsection (b); and

(B)

the bank has not—

(i)

provided to the consumer—

(I)

the original check; or

(II)

a copy of the original check (including an image or a substitute check) that accurately represents all of the information on the front and back of the original check, as of the time at which the original check was truncated; and

(ii)

demonstrated to the consumer that the substitute check was properly charged to the consumer account.

(2)

Timing of recredit

(A)

In general

(B)

Recredit pending investigation

If the bank has not yet determined that the consumer’s claim is valid before the end of the 10th business day after the business day on which the consumer submitted the claim, the bank shall recredit the consumer’s account for—

(i)

the lesser of the amount of the substitute check that was charged against the consumer account, or $2,500, together with interest if the account is an interest-bearing account, no later than the end of such 10th business day; and

(ii)

the remaining amount of the substitute check that was charged against the consumer account, if any, together with interest if the account is an interest-bearing account, not later than the 45th calendar day following the business day on which the consumer submits the claim.

(d)

Availability of recredit

(1)

Next business day availability

(2)

Safeguard exceptions

A bank may delay availability to a consumer of a recredit provided under subsection (c)(2)(B)(i) until the start of either the business day following the business day on which the bank determines that the consumer’s claim is valid or the 45th calendar day following the business day on which the consumer submits a claim for such recredit in accordance with subsection (b), whichever is earlier, in any of the following circumstances:

(A)

New accounts

(B)

Repeated overdrafts

Without regard to the charge that is the subject of the claim for which the recredit was made—

(i)

on 6 or more business days during the 6-month period ending on the date on which the consumer submits the claim, the balance in the consumer account was negative or would have become negative if checks or other charges to the account had been paid; or

(ii)

on 2 or more business days during such 6-month period, the balance in the consumer account was negative or would have become negative in the amount of $5,000 or more if checks or other charges to the account had been paid.

(C)

Prevention of fraud losses

(3)

Overdraft fees

(e)

Reversal of recredit

A bank may reverse a recredit to a consumer account if the bank—

(1)

determines that a substitute check for which the bank recredited a consumer account under subsection (c) was in fact properly charged to the consumer account; and

(2)

notifies the consumer in accordance with subsection (f)(3).

(f)

Notice to consumer

(1)

Notice if consumer claim not valid

If a bank determines that a substitute check subject to the consumer’s claim was in fact properly charged to the consumer’s account, the bank shall send to the consumer, no later than the business day following the business day on which the bank makes a determination—

(A)

the original 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 whether or not the consumer’s claim is valid; and

(B)

an explanation of the basis for the determination by the bank that the substitute check was properly charged, including a statement that the consumer may request copies of any information or documents on which the bank relied in making the determination.

(2)

Notice of recredit

If a bank recredits a consumer account under subsection (c), the bank shall send to the consumer, no later than the business day following the business day on which the bank makes the recredit, a notice of—

(A)

the amount of the recredit; and

(B)

the date the recredited funds will be available for withdrawal.

(3)

Notice of reversal of recredit

In addition to the notice required under paragraph (1), if a bank reverses a recredited amount under subsection (e), the bank shall send to the consumer, no later than the business day following the business day on which the bank reverses the recredit, a notice of—

(A)

the amount of the reversal; and

(B)

the date the recredit was reversed.

(4)

Mode of delivery

(g)

Other claims not affected

(h)

Clarification concerning consumer possession

(i)

Scope of application

(Pub. L. 108–100, § 7, Oct. 28, 2003, 117 Stat. 1182.)

cite as: 12 USC 5006