Amendments to Regulation CC Take Effect July 1, 2018

The final amendments 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 amendments create a framework for electronic check collection and return and create new warranties for electronic checks, which will result in a consistent warranty chain regardless of the form the check is presented, (paper or electronic).

One of the key changes addresses the fraud challenges caused by checks received via Remote Deposit Capture (RDC) i.e. one via RDC and then deposited later as a paper check at another institution. The change in regulation assigns the loss to the financial institution that accepts check through RDC and makes the financial institution that receives the paper check version of the deposit whole. However, there is an exception: If the check received in paper form carries a restrictive endorsement then the financial institution receiving that paper check is liable for losses. If a credit union participates in RDC you should consider a restrictive endorsement, an example would be “For ABC FCU Mobile Deposit Only” in addition to your signature. This will ensure priority if a member tries to deposit the check at another institution.

Link to the Regulation CC Final Rule.