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U.S. Code as of:
01/19/04
Section 5007. Expedited recredit procedures for banks
(a) Recredit claims
(1) In general
A bank may make a claim against an indemnifying bank for
expedited recredit for which that bank is indemnified if -
(A) the claimant bank (or a bank that the claimant bank has
indemnified) has received a claim for expedited recredit from a
consumer under section 5006 of this title with respect to a
substitute check or would have been subject to such a claim had
the consumer's account been charged;
(B) the claimant bank has suffered a resulting loss or is
obligated to recredit a consumer account under section 5006 of
this title with respect to such substitute check; and
(C) production of the original check, another substitute
check, or a better copy of the original check is necessary to
determine the validity of the charge to the customer account or
any warranty claim connected with such substitute check.
(2) 120-day period
Any claim under paragraph (1) may be submitted by the claimant
bank to an indemnifying bank before the end of the 120-day period
beginning on the date of the transaction that gave rise to the
claim.
(b) Procedures for claims
(1) In general
To make a claim under subsection (a) for an expedited recredit
relating to a substitute check, the claimant bank shall send to
the indemnifying bank -
(A) a description of -
(i) the claim, including an explanation of why the
substitute check cannot be properly charged to the consumer
account; or
(ii) the warranty claim;
(B) a statement that the claimant bank has suffered a loss or
is obligated to recredit the consumer's account under section
5006 of this title, together with an estimate of the amount of
the loss or recredit;
(C) the reason why production of the original check, another
substitute check, or a better copy of the original check is
necessary to determine the validity of the charge to the
consumer account or the warranty claim; and
(D) information sufficient for the indemnifying bank to
identify the substitute check and to investigate the claim.
(2) Requirements relating to copies of substitute checks
If the information submitted by a claimant bank pursuant to
paragraph (1) in connection with a claim for an expedited
recredit includes a copy of any substitute check for which any
such claim is made, the claimant bank shall take reasonable steps
to ensure that any such copy cannot be -
(A) mistaken for the legal equivalent of the check under
section 5003(b) of this title; or
(B) sent or handled by any bank, including the indemnifying
bank, as a forward collection or returned check.
(3) Claim in writing
(A) In general
An indemnifying bank may, in the discretion of the bank,
require the claimant bank to submit the information required by
paragraph (1) in writing, including a copy of the written or
electronically submitted claim, if any, that the consumer
provided in accordance with section 5006(b) of this title.
(B) Means of submission
An indemnifying bank that requires a submission of
information under subparagraph (A) may permit the claimant bank
to make the submission electronically, if the claimant bank has
agreed to communicate with the indemnifying bank in that
manner.
(c) Recredit by indemnifying bank
(1) Prompt action required
No later than 10 business days after the business day on which
an indemnifying bank receives a claim under subsection (a) from a
claimant bank with respect to a substitute check, the
indemnifying bank shall -
(A) provide, to the claimant bank, the original check (with
respect to such substitute 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 the bank's claim
is not valid; and
(B) recredit the claimant bank for the amount of the claim up
to the amount of the substitute check, plus interest if
applicable; or
(C) provide information to the claimant bank as to why the
indemnifying bank is not obligated to comply with subparagraph
(A) or (B).
(2) Recredit does not abrogate other liabilities
Providing a recredit under this subsection to a claimant bank
with respect to a substitute check shall not absolve the
indemnifying bank from liability for claims brought under any
other law or from additional damages under section 5005 or 5009
of this title with respect to such check.
(3) Refund to indemnifying bank
If a claimant bank reverses, in accordance with section 5006(e)
of this title, a recredit previously made to a consumer account
under section 5006(c) of this title, or otherwise receives a
credit or recredit with regard to such substitute check, the
claimant bank shall promptly refund to any indemnifying bank any
amount previously advanced by the indemnifying bank in connection
with such substitute check.
(d) Production of original check or a sufficient copy governed by
section 5005(d)
If the indemnifying bank provides the claimant bank with the
original check or a copy of the original check (including an image
or a substitute check) under subsection (c)(1)(A), section 5005(d)
of this title shall govern any right of the indemnifying bank to
any repayment of any funds the indemnifying bank has recredited to
the claimant bank pursuant to subsection (c).
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