Definition of Electronic Message Return Former Section I(W) (Page 7) Deleted defined term “Electronic Message Return.” Proposed change to Section XX deletes the option of a returning bank to use an electronic message return (without the corresponding check image). With the proposed deletion of the option of a “message only” return under Section XX, the defined term “Electronic Message Return” is not needed. Definition of Not Our Item (NOI) Draft Section I(JJ) Former Section I(JJ) (Page 9) Revised the defined term “Not Our Item/NOI.” Revised definition of NOI to change phrase “subsequent Collecting Bank” to “any Collecting Bank in the forward collection of the same item.” Revisions intended to clarify definition. Not related to Reg CC amendment rules changes. Definition of Sending Bank Draft Section I(EEE) Former Section I(EEE) (Page 12) Revised the defined term “Sending Bank.” Revised definition of “Sending Bank” to directly refer to the sending of “Electronic Checks,” instead of sending of “items.” Definitions of Image and Electronic Image Draft Section I(DD) (Page 9) Former Section I(T) (Page 9) Former Section I(CC) (Page 9) Revised the defined term “Image” and deleted defined term “Electronic Image.” Revised definition of term “Image” to include portions of the prior definitions of both “Image” and “Electronic Image.” The new defined term “Image” is used in Rules to refer to the image portion of the Electronic Check (without the related Electronic Information). When the Image is combined with the “Electronic Information,” they form the “Electronic Check” or the “Electronic Returned Check”, as applicable. This drafting approach to having separate terms for “Image” and “Electronic Information” tracks Regulation CC which defines “Electronic Check” as consisting of an image and electronic information derived from the paper check. Definition of Electronic Indorsement Draft Section I(V) Former Section I(V) (Page 7) Revised the defined term “Electronic Indorsement.” Revised definition of term “Electronic Indorsement” to include reference to the indorsement requirements under Regulation CC. Reg CC now applies the industry standard for indorsements as a matter of law to Electronic Indorsements on Electronic Checks. Definition of MICR Line Added new definition of “Magnetic Ink Character Added defined term for MICR line based on amended Regulation CC definition.
Part 2: Proposed Rules Changes for Section XIX of the Rules Section # Proposed Revision Explanation of Proposed Revision Section XIX Electronic Checks Section XIX(A) through Section XIX(Q) (Page 136 - 234) Various changes to reflect new defined terms of Electronic Check, Image and Electronic Information. Changes throughout Section XIX to reflect transition to new ECCHO defined terms: Electronic Check, Image and Electronic Information. Section XIX(A) Compliance with Other Rules Sections (Page 136) Definitional changes only. No substantive changes to this section. Updated defined terms. Section XIX(B) Reserved (Page 137) No changes. N/A Section XIX(C) Items Eligible for Imaging (Page 138-141) Added the word “paper” in Section XIX(C)(1)(a.1) Text in Section XIX(C)(1) regarding banks’ agreement to send items with incomplete MICR line --- shortened and moved to bottom of Section XIX(C)(1). Text formerly in Section XIX(C)(1) regarding items in carrier envelope --- moved down to new Section XIX(C)(6). Text formerly in Section XIX(C)(2) regarding Electronic Checks with missing image --- moved down to new Section XIX(C)(7). Shortened introduction to Section XIX(C)(3) regarding Addition of the word “paper” in Section XIX(C)(1)(a.1) more clearly links ECCHO eligibility rule to the definition of “Electronic Check” in amended Regulation CC which says that an Electronic Check is derived from a “paper check.” Other changes to Section XIX(C) and related Commentary are intended to improve readability by (i) relocating certain text to new standalone paragraphs within Section XIX(C) and (ii) shortening some phrasing.
Recourse to Prior Collecting or Receiving Bank (Page 233) Part 3: Proposed Rules Changes for Section XX of the Rules Section # Proposed Revision Explanation of Proposed Revision Section XX Electronic Returned Checks Section XX(A) through Section XX(K) Electronic Returned Checks (Page 235-291) Replaced term “Image Return” with “Electronic Returned Check” throughout Section XX. Used new defined terms of “Image” and “Electronic Information” to refer to the image and electronic file portions of an Electronic Returned Check. Made various conforming modifications to address use of new defined terms. Updated citations to Regulation CC to reflect new numbering of amended Regulation CC. Proposed revisions throughout Section XX to reflect transition to new ECCHO defined terms of “Electronic Returned Check,” “Electronic Information” and “Image.” Rules changes align to new defined term “Electronic Returned Check” in amended Regulation CC. Section XX(A) Compliance with Other Rules Sections (Page 235) Definitional changes only. No substantive changes to this section. Updated defined terms. Section XX(B) Reserved No changes. N/A
(Page 244) indorsement on the back of an Image of an Electronic Returned Check. The proposed draft rule changes the current rule which references an indorsement “that is physically printed on the back of the Electronic Image.” [This is not a Regulation CC related change.] Section XX(D)(1) Commentary (Page 249) Made conforming changes to the Commentary to reflect proposed changes to Section XX(D)(1) regarding reliance on X9 standard and Regulation CC for indorsement requirements. Added new Commentary to explain the new ECCHO Rule that states that the return reason does not have to appear on the front of the Electronic Returned Check. Deleted Commentary stating that use of an “overlay” indorsement satisfies the indorsement requirement. Commentary now refers to the applicable X9 industry standard governing indorsements that are made applicable by Regulation CC to Electronic Returned Checks. Removed Commentary that recommended retention of prior indorsements on an Electronic Returned Check. Revised explanation of possible liability to Returning Member that did not include prior indorsements. Proposed revisions to Commentary are mostly conforming changes or additional text to Commentary to reflect the above described ECCHO Rules changes to Section XX(D)(1). The Commentary reference to “overlay” indorsements is proposed for deletion because the ECCHO Rules intend to rely on the ANSI X9.100-187 standard regarding indorsements without any expansion or variation. ANSI X9.100-187 does include a statement regarding the use of overlay indorsements. The current Commentary statement recommending retention of prior indorsements is proposed for deletion because the statement could be viewed as inconsistent with the obligation of banks to comply with X9 standard regarding indorsements, as made applicable by amended Regulation CC. The proposed revised Commentary retains the current Commentary’s explanation of how liability arises when a Returning Member does not include prior indorsements when sending an Electronic Returned Check. Section XX(D)(4) Commentary Added “suspected duplicate” return reason as an example of a situation where a paying bank The newly added text on “suspect duplicate” return reason provides a more common return reason example. [This is not a Regulation CC related change.]
(Page 251) provides one (but not all) return reasons applicable to an Electronic Returned Check. Deleted current Commentary example of “insufficient image quality” return reason. Section XX(E) Status of Electronic Returned Check (Page 255) Added new sentence to clarify that Electronic Returned Checks under ECCHO Rules are also Electronic Returned Checks under Regulation CC. Added new sentence to rule to reference banks’ agreement for return of Electronic Returned Checks under amended Section 229.33(b) of Regulation CC. Amended Regulation CC now applies to Electronic Returned Checks as a matter of law, so it is not necessary to apply Regulation CC by agreement of banks within ECCHO Rules. New text in this Section clarifies that an “Electronic Returned Check” under ECCHO Rules is also subject to Regulation CC. Section §229.33(b) of amended Regulation CC states that banks must have an agreement to specify terms for return of Electronic Returned Checks. New text in Section XX(E) clarifies that the ECCHO Rules form part of this agreement of the banks to receive return of Electronic Returned Checks. Section XX(E) Commentary (Page 256) Added new Commentary that an Electronic Returned Check is subject to Regulation CC as matter of law. Added new Commentary that ECCHO Rules form part of an agreement of banks for electronic return of an item as required under amended Regulation CC. New Commentary describes how Regulation CC applies as matter of law to Electronic Returned Checks. New Commentary explains how ECCHO Rules form part of an agreement of banks for the return of an Electronic Returned Check, and that such agreements are required under amended Regulation CC. Section XX(F)(2) Return of Electronic Returned Checks (Page 257) Revised phrase that Electronic Returned Check “shall be provided on a media” to “shall be delivered in a manner” agreed to by the banks. This reference to “media” was to support the option for return of Electronic Returned Checks using CD Roms or other transmission methods. This is an out dated reference in current check image exchange. [This is not a Regulation CC related change.] Section XX(F)(3) Deleted multiple references to returning Electronic Returned Check on “other media.” This “other media” option for return of Electronic Returned Checks was an out dated option of using CD Rom to return electronic checks. This option is not used or supported by Member Banks, and it is proposed for deletion in the draft Rules.
environment, there is less of a need for sample agreement text. [This is not a Regulation CC related change.] Exhibit V Licensed Entities (Begins on exhibit page 17) No change. N/A Exhibit VI Electronic Image Quality (Begins on exhibit page 18) This exhibit discusses image quality standards. Added in a discussion of the definition of the term “usability” which was previously in the ECCHO Rules definition section. The content of the Exhibit remains substantially the same. However, as a result of the proposed changes to ECCHO Rules to rely exclusively on amended Regulation CC warranties regarding image quality, this Exhibit is no longer referenced within the ECCHO Rules. This exhibit is now provided as Exhibit to Rules for informational purposes only. Exhibit VII Exchange of Image of Canadian Item (Begins on exhibit page 21) Definitional changes only. No substantive changes to this section. Updated defined terms. Exhibit VIII Exhibits Related to Rules in Section XIX(N) and XIX(O) (Begins on exhibit page 22) Definitional changes only. No substantive changes to this section. Updated defined terms. Updated defined terms. Exhibit IX Compensation Rules (Begins on exhibit page 37) Definitional changes only. No substantive changes to this section. Updated defined terms.