October 15, 2004

Starting in October 2004, ECSI initiated a process known as Re-presented Check Entries (RCK) for re-presenting NSF or Uncollected Consumer Checks electronically rather than by paper.

Below is an excerpt from the 2004 ACH Rules pertaining to the processing of NSF, or Uncollected Consumer Checks as RCK Transactions:

B. LEGAL FRAMEWORK

Re-presented Check Entries (RCK entries) are subject to applicable NACHA Operating Rules, the Uniform Commercial Code, and Federal Reserve Regulation CC. These entries are not, however, subject to the Electronic Funds Transfer Act or Regulation E. The legal framework for Re-presented Check Entries is premised on the fact that the origin of each re-presented check entry is a paper check that has been dishonored. Transfers of funds that were originated by a check, draft, or similar paper instrument are specifically excluded from coverage under the EFTA (15 U.S.C. 1693a(6)) and Regulation E (12 C.F.R. 205.3(c)(1)). Accordingly, if a Re-presented Check Entry is treated as a check transaction for purposes of the EFTA and Regulation E, it follows that the UCC and Regulation CC should continue to be the bodies of law that govern the rights and responsibilities of the parties involved with that payment, even though it has been converted to electronic form.

2. NOTICE REQUIREMENT

An RCK entry is authorized by the consumer through the provision by the Originator of a notice to the check writer and the subsequent receipt of the consumer's check by the Originator. Originators of RCK entries must provide notice to the check writer, prior to receiving the item to which the RCK entry relates, informing the check writer that his returned check may be collected electronically if the check is returned for insufficient or uncollected funds. The manner in which the Originator provides notice to the check writer is not prescribed by the NACHA Operating Rules. However, the notice must clearly and conspicuously state the terms of the Re-presented Check Entry policy. It is recommended that notice provided at the point-of-sale be clearly displayed on a sign at the point-of-sale, and that notice provided by a billing firm (i.e., utility company or credit card company which issues a bill for payment) be clearly displayed on or with the monthly billing statement.

Originators should be aware that, to protect both the check writer and the RDFI, a check writer will be able to sign a written statement under penalty of perjury and be recredited for the amount of the entry if the required notification by the Originator is not provided. The RDFI, in turn, will be able to return the RCK entry by transmitting the return entry to its ACH Operator by its deposit deadline for the return entry to be made available to the ODFI no later than the opening of business on the banking day following the sixtieth calendar day following the settlement date of the RCK entry.

For more information about the RCK process, please see our News Article about the subject.

If you have any questions about how this will affect ECSI's processing of payments or NSF checks, you can contact us at admin@ecsi.net.