Newsroom
How altered checks, breach of warranty can affect CUs
Transfer warranties and presentment warranties can affect the model Uniform Commercial Code's (UCC) allocation of loss rules for fraudulent and altered checks, writes NAFCU Regulatory Compliance Counsel David Park in a new Compliance Blog post.
Every time a check is presented for payment, the presenting bank and the earlier transferors warrant several things under the UCC's rules, according to Park, including that a check is not altered. If a check is altered, "there is a potential breach of the transfer and presentment warranties by the warrantor. But the UCC expressly discharges a warrantor's liability in certain circumstances," writes Park.
The UCC's rules explain that if a notice of a breach of warranty claim is given to a warrantor more than 30 days after the claimant knows of the breach of the aforementioned warranties, then the warrantor could theoretically be discharged from liability for the breach.
Park, however, notes two limitations even if notice of the claim comes after 30 days. "First, the 30 days does not begin to run until the claimant – the paying bank in our example – has reason to know of the breach and the identity of the warrantor," Park says. "Second, even if the notice fell outside of the 30 day window, the statute suggests that a warrantor is only discharged to the extent of any loss caused by the delay in giving notice of the claim."
Park says that while the 30-day window could provide some cover for a potential breach, it may not be helpful in some circumstances.
NAFCU's Compliance Team publishes a new blog every Monday, Wednesday and Friday on key regulatory issues affecting federally insured credit unions. Sign up to receive new Compliance Blog posts.
Share This
Related Resources
The Bottom Line on Insurance Tracking and Collateral Protection
Strategy
preferred partner
Allied Solutions
Blog Post
Resiliency In Your Incident Response Plan
Cybersecurity
preferred partner
DefenseStorm
Blog Post
Add to Calendar 2024-04-15 09:00:00 2024-04-15 09:00:00 Mergers and Acquisitions: Unifying Two Different Executive Total Compensation and Benefits Programs Listen On: Key Takeaways: [03:50] With the merger of a smaller credit union into a larger one you are really only dealing with integrating staff into the larger credit union. [05:53] When working with a merger of equals we start with a deep dive into the executive compensation and benefits of each organization. [09:09] If your current executive benefits provider doesn’t conduct regular plan evaluations, consider having a plan audit anyway. [13:46] Don’t overpay for these things if you don’t have to. When you have more options available that means the cost is more appropriate. [17:11] It is in a unified organization’s best interest to do tier timelines where we look at your top executives who are critical to the unified organization’s success today and then slowly add in the next levels. Web NAFCU digital@nafcu.org America/New_York public
Mergers and Acquisitions: Unifying Two Different Executive Total Compensation and Benefits Programs
preferred partner
Gallagher
Podcast
Add to Calendar 2024-04-11 14:00:00 2024-04-11 14:00:00 Regulation E: Impacts Across Your Institution Dive into regulatory excellence with, Regulation E: Impacts Across Your Institution. This webinar is tailored to empower you with the knowledge and strategies necessary to effectively implement the Electronic Funds Transfer Act (EFTA) and Regulation E within your operations. You’ll explore how to apply Regulation E across various business areas to ensure compliance obligations are met with precision. Key Takeaways Learn the basics of EFTA and Regulation E Understand how to apply Regulation E at your organization to detect processes and transactions that require Regulation E compliance Discover how Regulation E may apply to a large breath of areas in your institutions and functions for which you may rely on third-party vendors Review recent enforcement activity for non-compliance with EFTA and Regulation E Register Now $295 Members | $395 Nonmembers(Additional $50 for USB)One registration gives your entire team access to the live webinar and on-demand recording until April 11, 2025Go to the Online Training Center to access the webinar after purchase » Who Should Attend NCCOs NCRMs Compliance and risk titles Education Credits NCCOs will receive 1.0 CEUs for participating in this webinar NCRMs will recieve 1.0 CEUs for participating in this webinar Web NAFCU digital@nafcu.org America/New_York public
Regulation E: Impacts Across Your Institution
Credits: NCCO, NCRM
Webinar
Get daily updates.
Subscribe to NAFCU today.