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Consumer Banking and Payments Law: 7.7.8 Scams Using Gift Cards

Gift cards are a popular way for scammers to receive the victim’s money. Scammers urge the consumer to purchase the cards and then to give card numbers to the scammer. The scammer can then extract the card’s value, but the cards are virtually untraceable.

Consumer Banking and Payments Law: 7.7.9 State Escheat Laws

Every state has escheat, unclaimed property, or abandoned property laws, and one issue is whether, under these statutes, gift card issuers must transfer unused value to the state, which the state may then seek to return to the applicable consumers.1116 The Uniform Unclaimed Property Act adopted in fifteen states as their escheat statute specifically includes gift certificates.1117 Under the Act, the state official who administers the statute must advertise lists of “abandoned” property.

Consumer Banking and Payments Law: 4.4.5 Special Rules for Embezzlement by a Trustee or Other Fiduciary

The UCC has special rules when a fiduciary “embezzles money of the represented person by applying the proceeds of an instrument that belongs to the represented person to the personal use of the fiduciary.”156 If a person taking a check from the fiduciary has knowledge of the fiduciary status, and, notice or knowledge of the breach of the fiduciary duty, depending on the type of misdeed, the party taking the check may be liable for a claim to the instrument under U.C.C.

Consumer Banking and Payments Law: 4.5.3 Cash Deposits

The day on which a bank must make cash deposits available for withdrawal depends on whether or not the deposit was made in person. If made in person to an employee of the depository bank, the funds must be made available not later than the business day after the banking day on which the cash is deposited.206 Otherwise, the funds must be made available not later than the second business day after the banking day of the deposit.207

Consumer Banking and Payments Law: 4.5.4 Electronic Deposits

Regulation CC governs “electronic deposits,” defined as deposits by wire transfer or ACH credit transfer.208 Banks must make deposits by electronic payments available for withdrawal not later than the business day after the banking day on which the bank received the electronic payment.209 An electronic payment is deemed to have been received when the bank has received the payment in actual and finally collected funds, the information about the account, and the amount to be credited.

Consumer Banking and Payments Law: 4.5.5 General Issues Affecting Regulation CC’s Funds Availability Schedule

The time by which funds must be made available is determined by a mandatory availability schedule. Availability depends upon the type (i.e., cash, electronic, type of check) and manner (i.e., in person, by ATM) of the consumer’s deposit. Banks may make funds available sooner than is required by the schedule.212

The funds availability schedule does not affect a depositary bank’s right to:

Consumer Banking and Payments Law: 7.8 Mobile Payment Systems

Payment systems accessible through mobile devices are rapidly developing. The term “mobile payments” generally refers to a payment made through a mobile phone other than one that is made simply by accessing a bank’s mobile application (which is termed “mobile banking”).

Many mobile payment applications (or “apps”) that access stored funds are effectively prepaid cards or gift cards and are covered under the laws discussed above.1139

Consumer Banking and Payments Law: 4.1 Introduction

This chapter examines a consumer’s rights when a paper check is paid to the consumer—that is, when the consumer is a payee on a paper check. The rules discussed in this chapter apply equally to paper checks drawn by non-governmental and governmental drawers.1

Consumer Banking and Payments Law: 4.2.2 What Constitutes Delivery of the Check to the Payee?

Delivery of the check to the payee occurs when the payee comes into possession of the check “either directly or through delivery to an agent or a co-payee.”27 The UCC commentary explains: “The payee receives delivery when the check comes into the payee’s possession, as for example when it is put into the payee’s mailbox. Delivery to an agent is delivery to the payee. If a check is payable to more than one payee, delivery to one of the payees is deemed to be delivery to all of the payees.”28

Consumer Banking and Payments Law: 4.4.1.1 Introduction

The rights of the payee of a check that is lost or stolen after delivery differ depending on whether the check was bearer or order paper as of when the check was lost or stolen. If the check was bearer paper when lost or stolen, the payee will have no rights on the check except against the thief, although the payee may have rights under other law.

Consumer Banking and Payments Law: 4.5.7 Second-Day and Fifth-Day Availability

Local checks that are not entitled to next-day availability must be made available by the second business day following the banking day on which the funds were deposited,254 unless an exception applies.255 Non-local checks must be made available not later than the fifth business day following the banking day on which the funds were deposited.256 However, effective February 27, 2010, the Federal Reserve Board amended the availability rules for check

Consumer Banking and Payments Law: 4.5.8 One-Day Extension for Certain Withdrawals

The consumer’s bank is allowed to extend the time it holds the consumer’s funds by one business day if the consumer withdraws funds not by writing a regular check but by withdrawing cash or withdrawing by electronic payment or by obtaining a cashier’s check, a teller’s check, or a certified check.258 The one-day extension does not apply to all of the consumer’s funds in this category, however. The bank must make $450 available for withdrawal by these means not later than 5:00 p.m.

Consumer Banking and Payments Law: 4.5.9.1 New Accounts

Regulation CC establishes an exception to the funds availability rules for new accounts, that is, accounts established within the last thirty days.263 An account is not considered new if the consumer already had another account at the same bank for at least thirty days.