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Consumer Banking and Payments Law: Section 3-404. Impostors; Fictitious Payees.

(a) If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the impostor, or to a person acting in concert with the impostor, by impersonating the payee of the instrument or a person authorized to act for the payee, an indorsement of the instrument by any person in the name of the payee is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

Consumer Banking and Payments Law: Section 3-407. Alteration.

(a) “Alteration” means (i) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party, or (ii) an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

Consumer Banking and Payments Law: Introduction and Listing of Provisions

The Check Clearing for the 21st Century Act (Check 21 Act)—12 U.S.C. §§ 5001–5018—is reprinted below. The public law section number from the original enactment of the Act, Pub. L. No. 108–100, 117 Stat. 1177 (2003), is found in brackets at the end of the title of each codified section.

Title 12—Banks and Banking

Chapter 50—Check Truncation

Sec.

5001. Findings; purposes [§ 2]

5002. Definitions [§ 3]

5003. General provisions governing substitute checks [§ 4]

Consumer Banking and Payments Law: 12 U.S.C. § 5001. Findings; purposes

(a) Findings

The Congress finds as follows:

(1) In the Expedited Funds Availability Act, enacted on August 10, 1987, the Congress directed the Board of Governors of the Federal Reserve System to consider establishing regulations requiring Federal reserve banks and depository institutions to provide for check truncation, in order to improve the check processing system.

(2) In that same Act, the Congress—

Consumer Banking and Payments Law: 12 U.S.C. § 5002. Definitions

For purposes of this Act, the following definitions shall apply:

(1) Account

The term “account” means a deposit account at a bank.

(2) Bank

The term “bank” means any person that is located in a State and engaged in the business of banking and includes—

(A) any depository institution (as defined in section 461 (b)(1)(A) of this title);

Consumer Banking and Payments Law: 12 U.S.C. § 5004. Substitute check warranties

A bank that transfers, presents, or returns a substitute check and receives consideration for the check warrants, as a matter of law, to the transferee, any subsequent collecting or returning bank, the depositary bank, the drawee, the drawer, the payee, the depositor, and any endorser (regardless of whether the warrantee receives the substitute check or another paper or electronic form of the substitute check or original check) that—

Consumer Banking and Payments Law: 12 U.S.C. § 5008. Delays in an emergency

A delay by a bank beyond the time limits prescribed or permitted by this chapter shall be excused if the delay is caused by interruption of communication or computer facilities, suspension of payments by another bank, war, emergency conditions, failure of equipment, or other circumstances beyond the control of a bank and if the bank uses such diligence as the circumstances require.

[Pub. L. No. 108-100, § 9, 117 Stat. 1188 (Oct. 28, 2003)]

Consumer Banking and Payments Law: 12 U.S.C. § 5009. Measure of damages

(a) Liability

(1) In general

Except as provided in section 5005 of this title, any person who, in connection with a substitute check, breaches any warranty under this chapter or fails to comply with any requirement imposed by, or regulation prescribed pursuant to, this chapter with respect to any other person shall be liable to such person in an amount equal to the sum of—

(A) the lesser of—

Consumer Banking and Payments Law: 12 U.S.C. § 5011. Consumer awareness

(a) In general

Each bank shall provide, in accordance with subsection (b), a brief notice about substitute checks that describes—

(1) how a substitute check is the legal equivalent of an original check for all purposes, including any provision of any Federal or State law, and for all persons, if the substitute check—

Consumer Banking and Payments Law: 12 U.S.C. § 5013. Variation by agreement

(a) Section 5007

Any provision of section 5007 of this title may be varied by agreement of the banks involved.

(b) No other provisions may be varied

Except as provided in subsection (a), no provision of this chapter may be varied by agreement of any person or persons.

[Pub. L. No. 108-100, § 14, 117 Stat. 1190 (Oct. 28, 2003)]

Consumer Banking and Payments Law: 12 U.S.C. § 5015. Study and report on funds availability

(a) Study

In order to evaluate the implementation and the impact of this chapter, the Board shall conduct a study of—

(1) the percentage of total checks cleared in which the paper check is not returned to the paying bank;

(2) the extent to which banks make funds available to consumers for local and nonlocal checks prior to the expiration of maximum hold periods;

Consumer Banking and Payments Law: 12 U.S.C. § 5016. Statistical reporting of costs and revenues for transporting checks between reserve banks

In the annual report prepared by the Board for the first full calendar year after October 28, 2003 and in each of the 9 subsequent annual reports by the Board, the Board shall include the amount of operating costs attributable to, and an estimate of the Federal Reserve banks’ imputed revenues derived from, the transportation of commercial checks between Federal Reserve bank check processing centers.

[Pub. L. No. 108-100, § 17, 117 Stat. 1191 (Oct. 28, 2003)]