CO Code § 4-4.5-201 (2021)
2021 Colorado Code|Title 4 - Uniform Commercial Code|Article 4.5 - Funds Transfers|Part 2 - Issue and Acceptance of Payment Order|§ 4-4.5-201. Security Procedure

 “Security procedure” means a procedure established by agreement of a customer and a receiving bank for the purpose of (i) verifying that a payment order or communication amending or cancelling a payment order is that of the customer, or (ii) detecting error in the transmission or the content of the payment order or communication. A security procedure may require the use of algorithms or other codes, identifying words or numbers, encryption, callback procedures, or similar security devices. Comparison of a signature on a payment order or communication with an authorized specimen signature of the customer is not by itself a security procedure.   History. Source: L. 90: Entire article added, p. 345, § 1, effective January 1, 1991.    Cross references:   For offenses relating to this title, see part 5 of article 5 of title 18.   Official Comments   Copyright by the American Law Institute and the National Conference of Commissioners on Uniform State Laws. Reproduced with the permission of the Permanent Editorial Board for the Uniform Commercial Code. All rights reserved. —   Editor's note:   The Official Comments to the Uniform Commercial Code are available only in the printed book form of Colorado Revised Statutes. As noted above, the Official Comments are subject to copyright by the American Law Institute and the National Conference of Commissioners on Uniform State Laws. At this time, Colorado has a license to reprint the Official Comments in the printed book form.   Editor's note:   The National Conference of Commissioners on Uniform State Laws numbered this article as “4A”. In C.R.S., it is numbered as article “4.5”. References in the OFFICIAL COMMENTS to specific sections can be translated to C.R.S. numbers by changing “4A” to “4.5” and, where necessary, adding the appropriate title of C.R.S. For example, a reference in an OFFICIAL COMMENT to section “4A-101” would translate to section “4-4.5-101”.   Law reviews:   For article, “New Article 4.5 of the UCC: Funds Transfers”, see 20 Colo. Law. 457 .   OFFICIAL COMMENT   A large percentage of payment orders and communications amending or cancelling payment orders are transmitted electronically and it is standard practice to use security procedures that are designed to assure the authenticity of the message. Security procedures can also be used to detect error in the content of messages or to detect payment orders that are transmitted by mistake as in the case of multiple transmission of the same payment order. Security procedures might also apply to communications that are transmitted by telephone or in writing. Section 4A-201 defines these security procedures. The definition of security procedure limits the term to a procedure “established by agreement of a customer and a receiving bank.” The term does not apply to procedures that the receiving bank may follow unilaterally in processing payment orders. The question of whether loss that may result from the transmission of a spurious or erroneous payment order will be borne by the receiving bank or the sender or purported sender is affected by whether a security procedure was or was not in effect and whether there was or was not compliance with the procedure. Security procedures are referred to in Sections 4A-202 and 4A-203, which deal with authorized and verified payment orders, and Section 4A-205, which deals with erroneous payment orders.