mail or by any other means through which the con-
sumer has agreed to receive account information. 
(g) OTHER CLAIMS NOT AFFECTED.—Providing a 
recredit in accordance with this section shall not absolve 
the bank from liability for a claim made under any other 
law, such as a claim for wrongful dishonor under the Uni-
form Commercial Code, or from liability for additional 
damages under section 5 or 9. 
(h) SCOPE OF APPLICATION.—This section shall only 
apply to customers who are consumers. 
SEC. 7. 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 6 with respect to such 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 re-
sulting loss or is obligated to recredit a con-
sumer account under section 6 with respect to 
such substitute check; and
(C) production of the original check, an-
other substitute check, or a better copy of the 
original check is necessary to determine the va-
lidity of the charge to the customer account or 
any warranty claim connected with such sub-
stitute check. 
(2) 120-DAY PERIOD.—Any claim under para-
graph (1) may be submitted by the claimant bank 
to an indemnifying bank before the end of the 120-
day 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 sub-
section (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 6, to-
gether with an estimate of the amount of the 
loss or recredit; 
(C) the reason why production of the origi-
nal check, another substitute check, or a better 
copy of the original check is necessary to deter-
mine the validity of the charge to the consumer 
account or the warranty claim; and 
(D) information sufficient for the indem-
nifying 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 in-
cludes 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 can-
not be—
(A) mistaken for the legal equivalent of the 
check under section 3(b); or 
(B) sent or handled by any bank, including 
the indemnifying bank, as a forward collection 
or returned check. 
(3) CLAIM IN WRITING.—An indemnifying bank 
may, in the bank’s discretion, require the claimant
bank to submit in writing the information required 
by paragraph (1), including a copy of the written 
claim, if any, that the consumer submitted in ac-
cordance with section 6(b). 
(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 sub-
stitute check, the indemnifying bank shall—
(A) provide the original check (with respect 
to such substitute check), another substitute 
check, or a copy of the original check that is 
sufficient to determine that the bank’s claim is 
not valid to the claimant bank; 
(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 LI-
ABILITIES.—Providing a recredit under this sub-
section to a claimant bank with respect to a sub-
stitute check shall not absolve the indemnifying bank 
from liability for claims brought under any other law 
or from additional damages under section 5 or 9 
with respect to such check. 
(3) REFUND
TO
INDEMNIFYING
BANK.—If a 
claimant bank reverses, in accordance with section 
6(e), a recredit previously made to a consumer ac-
count under section 6(c), 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 ad-
vanced by the indemnifying bank in connection with 
such substitute check. 
(d) PRODUCTION OF ORIGINAL CHECK OR A SUFFI-
CIENT COPY GOVERNED BY SECTION 5(d).—If the indem-
nifying bank provides the claimant bank with the original 
check, another substitute check, or a sufficient copy of the 
original check under subsection (c)(1)(A), section 5(d) 
shall govern any right of the indemnifying bank to any 
repayment of any funds the indemnifying bank has recred-
ited to the claimant bank pursuant to subsection (c). 
SEC. 8. DELAYS IN AN EMERGENCY. 
Delay by a bank beyond the time limits prescribed 
or permitted by this Act is 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. 
SEC. 9. MEASURE OF DAMAGES. 
(a) LIABILITY.—
(1) IN GENERAL.—Except as provided in sec-
tion 5, any person who, in connection with a sub-
stitute check, breaches any warranty under this Act 
or fails to comply with any requirement imposed by, 
or regulation prescribed pursuant to, this Act with 
respect to any other person shall be liable to such 
person in an amount equal to the sum of—
(A) the lesser of—
(i) the amount of the loss suffered by 
the other person as a result of the breach 
or failure; or 
(ii) the amount of the substitute 
check; and 
(B) interest and expenses (including costs 
and reasonable attorney’s fees and other ex-
penses of representation) related to the sub-
stitute check. 
(2) OFFSET OF RECREDITS.—The amount of 
damages any person receives under paragraph (1), if
any, shall be reduced by the amount, if any, that the 
claimant receives and retains as a recredit under 
section 6 or 7. 
(b) COMPARATIVE NEGLIGENCE.—If a person incurs 
damages that resulted in whole or in part from the neg-
ligence or failure of that person to act in good faith, then 
the amount of any liability due to that person under sub-
section (a) shall be reduced in proportion to the amount 
of negligence or bad faith attributable to that person. 
SEC. 10. STATUTE OF LIMITATIONS AND NOTICE OF CLAIM. 
(a) ACTIONS UNDER THIS ACT.—
(1) IN GENERAL.—An action to enforce a claim 
under this Act may be brought in any United States 
district court, or in any other court of competent ju-
risdiction, before the end of the 1-year period begin-
ning on the date the cause of action accrues.
(2) ACCRUAL.—A cause of action accrues as of 
the date the injured party first learns, or by which 
such person reasonably should have learned, of the 
facts and circumstances giving rise to the cause of 
action. 
(b) DISCHARGE OF CLAIMS.—Except as provided in 
subsection (c), unless a person gives notice of a claim to 
the indemnifying or warranting bank within 30 days after 
the person has reason to know of the claim and the iden-
tity of the indemnifying or warranting bank, the indem-
nifying or warranting bank is discharged to the extent of 
any loss caused by the delay in giving notice of the claim. 
(c) NOTICE
OF CLAIM
BY CONSUMER.—A timely 
claim by a consumer under section 6 for expedited recredit 
constitutes timely notice of a claim by the consumer for 
purposes of subsection (b). 
SEC. 11. CONSUMER AWARENESS. 
(a) IN GENERAL.—Each bank shall provide, in ac-
cordance with subsection (b), a brief notice about sub-
stitute checks that describes—
(1) the process of check substitution and how 
the process may be different than the check clearing 
process with which the consumer may be familiar; 
and
(2) a description of the consumer recredit 
rights established under section 6 when a consumer 
believes in good faith that a substitute check was 
not properly charged to the consumer’s account. 
(b) DISTRIBUTION.—
(1) EXISTING
CUSTOMERS.—With respect to 
consumers that are customers of a bank on the ef-
fective date of this Act, a bank shall provide the no-
tice described in subsection (a) to each such con-
sumer no later than the first regularly scheduled
communication with the consumer after the effective 
date of this Act. 
(2) NEW
ACCOUNT
HOLDERS.—A bank shall 
provide the notice described in subsection (a) to each 
consumer, other than existing customers referred to 
in paragraph (1), at the time at which the customer 
relationship is initiated. 
(3) MODE OF DELIVERY.—A bank may send 
the notices required by this subsection by United 
States mail or by any other means through which 
the consumer has agreed to receive account informa-
tion. 
(c) MODEL LANGUAGE.—
(1) IN GENERAL.—No later than 1 year after 
the date of enactment of this Act, the Board shall 
publish model forms and clauses that a depository 
institution may use to describe each of the elements 
required by subsection (a). 
(2) SAFE HARBOR.—A bank shall be treated as 
being in compliance with the requirements of sub-
section (a) if the bank’s substitute check notice uses 
a model form or clause published by the Board and 
such model form or clause accurately describes the 
bank’s policies and practices. A bank may delete any
information in the model form or clause that is not 
required by this Act or rearrange the format. 
(3) USE
OF
MODEL
LANGUAGE
NOT
RE-
QUIRED.—This section shall not be construed as re-
quiring any bank to use a model form or clause that 
the Board prepares under this subsection. 
SEC. 12. EFFECT ON OTHER LAW. 
This Act shall supersede any provision of Federal or 
State law, including the Uniform Commercial Code, that 
is inconsistent with this Act, but only to the extent of the 
inconsistency. 
SEC. 13. VARIATION BY AGREEMENT. 
(a) SECTION 7.—Any provision of section 7 may be 
varied by agreement of the banks involved. 
(b) NO OTHER PROVISIONS MAY BE VARIED.—Ex-
cept as provided in subsection (a), no provision of this Act 
may be varied by agreement of any person or persons. 
SEC. 14. REGULATIONS. 
The Board may, by regulation, clarify or otherwise 
implement the provisions of this Act or may modify the 
requirements imposed by this Act with respect to sub-
stitute checks to further the purposes of this Act, includ-
ing reducing risk, accommodating technological or other 
developments, and alleviating undue compliance burdens.
SEC. 15. EFFECTIVE DATE. 
This Act shall take effect at the end of the 18-month 
period beginning on the date of the enactment of this Act, 
except as otherwise specifically provided in this Act.
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