ECCHO Returns and Adjustment Subcommittee
May 7, 2015
11:00 a.m. ET (10:00 a.m. CT, 9:00 a.m. MT and 8:00 a.m.
PT)
(866)290-9319 with pass code of 322464223
I.
Topics and objectives for today’s call

Subcommittee Objectives

In-person Returns and Adjustment meeting – 2015

Operations Committee Update

Matrix updates

Wrong Payee Credit

Return Adjustment

Rule 9

Duplicates Treasury Checks – Guest

Matrix Update – Canadian code - Guest

OCC Guidance

Description of Adjustment Reasons

Adjustment Matrix Timeframes

Duplicates

ECCHO Suggestion Paper

Exceptions

Intermediary Duplicate Processing

Going Forward
II.
Subcommittee Objectives

Objective of Subcommittee is to investigate and make
recommendations for Returns and Adjustment issues, resolution and
rules changes or updates
III.
In-person ECCHO Returns and Adjustment Meeting - 2015

Scheduled for September 16 and 17

Same format as 2014

Operations Committee meeting morning of September
16

R & A meeting afternoon of September 16 and morning
of September 17

SAVE the DATE was sent

Please try to attend
IV.
Operations Committee Update of Returns and Adjustment changes
(previously reviewed)

Matrix Updates agreed to recommend approval by Board at its June
meeting
1


Wrong Payee Credit

Return Adjustment
Rule 9 Changes (not attached)

Committee requested change

Drafted to allow extensive of timing for settlement when
banks “do not regularly participate in direct settlement
for return of checks”

Felt banks may choice to use letter process, even when
they have regular direct settlement arrangement

Updated Draft Rules Section XIX(O)

In event Paying Bank makes warranty claim to
Depositary Bank in manner that not subject to
automated or electronic settlement for returned
items between banks, time periods for payment of
warranty claim or disclaimed warranty claim shall be
extended to fifteenth Business Day
V.
Duplicates Treasury Checks – Guest

Member contacted regarding duplicates of Treasury Checks

As Treasury’s bank Fed makes duplicate claim based on
Treasury’s direction

Treasury is directing Fed to make claim to bank that they
received second item from

Treasury is making adjustment claim

Industry now attempting to make duplicate claims to first
bank

Fed provided Treasury contact and been in discussions with
them

Treasury doing internal research

Banks felt needed to do internal research on their experience with
Treasury duplicates

Treasury contact is joining meeting for discussion

James (Jim) Jeffries
VI.
ECCHO in process of developing rules for exchange of Canadian items in
U.S.

Canadian returns are different than U.S. with three timeframes, all
with entry

Next day

90 days

6 years

In order to accomplish return within U.S. may need adjustment code

Should be flexible to be used for all returns and any possible
adjustments

Canadian flow
2


Adjustment
Reason
27
Canadian Item
VII.
Discussed on last call

General agreement code is needed

Asked to consider code for exchange rate differences

Felt it would be helpful for someone to help educate group
about Canadian process

Invited Bill Saffici to talk to group– Been working with
Canadian banks

His presentation material is included separately
Canadian Item matrix
Deadline
(Ranges)
Min $
With/Without
Entry
Dr
/Cr
None
W Entry
Db/Cr
Party who
can Make
Adj
Either
Party
Party to
whom Adj
Can be
made
Either
Party
Information
Needed
Group
Adjust
No
OCC Guidance on Customer Adjustments

Member contacted regarding discussions with OCC on Customer
Adjustments

Banks long standing practice of pushing small dollar adjustments to
internal general ledger loss account (credit or debit) vs making
smaller dollar adjustment to customer

Also have practice of not passing small dollar adjustments
between banks

Been in place because Fed and/or Banks decisions that OOBs
under certain dollar threshold are cheaper to write off

OCC is pressing industry to lower this level

Have mentioned $0 dollar threshold

Banks are pushing back for something higher like $1 or $5
3


Discussed at last meeting and members shared their processes and
concerns

Some have heard CFBP may also be involved

Some banks do provide customer credit for any amount, if
identified by customer

Some always provide credit, but debit is optional

This could affect straight through processing

Fed may have to consider lowering their dollar threshold

This could increase staff and other costs within banks
Anything new to report

Is there anything ECCHO can or should do
VIII.
Description of Adjustment Reasons

It was recommended to document what certain adjustment reasons
mean

At in-person meeting talked about developing common
language

It was felt common language may be able to be satisfied
with descriptions

Positive feedback on descriptions

Additional input from last meeting tracked

Introductory statement tracked

Legal disclaimer to be added

Other input

Document will be posted on ECCHO website under Check Image
resources

Description will reference Adjustment Matrix and how to
access
IX.
Adjustment Matrix Timeframes

In developing ECCHO Adjustment rules and matrix, spent a lot of
time on Deadlines

When developed adjustment rules, adjustment providers agreed they
would adopt ECCHO rules

Viewpointe adopted ECCHO rules, few years ago

SVPCO is working on it

Comparison of timeframes below

Agreed to compare SVPCO with ECCHO timing

Left Fed timeframe for reference
Combined Rules Adjustment Matrix 2015
Adjustment Type
SVPCO - Timeframe
ECCHO Timeframe
Federal Reserve Timeframe
Adjustment Reversal
Amount Error/Difference
180 Days
180 Days
90 Calendar days
180 Calendar Days
20 Business Days
6 calendar months
4
Duplicate Single/Multiple
Entry in Error
Image Cash Letter Difference
Late Return Claim
Late Return Disclaimer
Mis-Matched Micr
Non-Conforming Image (NCI)
Non-Negotiable item
Not Our Item
Return Adjustment
Unauthorized Remotely
Created Check Claim
Warranty Indemnity Claim
Other
WithOut Entry Adjustment Type
Disposition of item
Expedited Re-Credit Claim
Other
Request for information
Source of Receipt
X.
180 Calendar Days
180 Days
7 Calendar Days
Doc Other/180 Calendar
Days
Doc Other/180 Calendar
Days
7 Calendar Days
7 Calendar Days
180 Calendar Days
180 Calendar Days
within 180 settle 21st day
180 Calendar Days
20 Business Days
20 Business Days
3 calendar months
20 Business Days
N/A
60 Calendar Days
2 months
20 Business Days
180 Calendar Days
20 Business Days
90 Calendar days
90 Calendar days
N/A
20 Business Days
20 Business Days
20 Business Days
Not Specified
Not Specified
180 Days
90 Calendar Days
1 Year
Without Entry only
90 Calendar Days
1 Year
Without Entry only
N/A
Not Specified
Not Specified
Items within 180 calendar
days auto-settle on the 21st
day
Items OVER 180 calendar
days Will auto-settle on 45th
day
Items within 180 calendar
days auto-settle on the 21st
day
Items OVER 180 calendar
days Will auto-settle on 45th
day
1 Year
120 Calendar Days
1 Year
N/A
120 Calendar Days
20 Business Days
N/A
1 Year
1 Year
Duplicates

Request from in-person meeting to poll members to determine
whether banks handle duplicates as returns vs adjustments

There was interest and survey will be conducted

Duplicate Adjustment Suggestion Paper

Improving Duplicate Payment Adjustment Resolution - An
ECCHO Suggestion Document – July 2014 – Posted to
ECCHO website

Paper addresses possible adjustment actions for most
common scenario of when deposit made through RDC and
then deposit of physical check

Exceptions and intermediary processing would be
worked on later

Exceptions for Duplicate Suggestion paper

In development of paper it was felt there would be need to deal
with exceptions, like stolen or counterfeit checks
5








XI.
Initially addressed BOFD and Paying banks with
intermediaries to be addressed later
Stale Dated Items

Item should be adjusted to BOFD B who’s customer or
itself should not have taken stale dated check and is not
HIDC

Cashier’s check cannot be stale dated so BOFD A
should take adjustment
Stolen Check

BOFD B should take it as long as it wasn’t the same
person making deposit or in concert with that person

Possibly require police report for B to take item
Represented checks

Do not represent original check, only use IRD

If original is presented BOFD who presented should
take adjustment
Altered checks

Claim should be made to bank that sent altered item
Duplicate claim, where first item was presented over year ago

Seeing increase in questions when first item was
presented and second item presented a year or more
later

Making claim to BOFD A is more difficult in this situation
Other exceptions

Counterfeit items

Others
If agreement on some of above will start documenting in
Suggestion paper
Intermediary Duplicate Processing

Identification of duplicate at intermediary bank

One BOFD and one intermediary bank

Claim to BOFD A
6


Two BOFDs and one intermediary bank

Who does Intermediary Bank make claim?
Identification of duplicate at paying bank

One BOFD and one intermediary bank

Claim to BOFD A

One BOFD and two Intermediary Banks

Claim to BOFD A

Two BOFDs and one intermediary bank

Who does intermediary make claim to
7

XII.
Two BOFDs and two intermediary banks

Intermediary makes claim to respective BOFD
Going Forward

Conduct survey on returns vs adjustment for duplicates

Continue work, as needed, on

Re-evaluating matrix deadlines

New adjustment reason in Matrix for Canadian items

Other issues

Continue work on Duplicate Adjustment Suggestion Paper for
exceptions

Other topics this Subcommittee may want to discuss

Administrative Reasons

Other issues

Next meetings

Tuesday June 16, 2015 at 3:00 p.m. ET (2:00 p.m. CT, 1:00
p.m. MT and 12:00 noon PT)

Friday July 31, 2015 at11:00 a.m. ET (10:00 a.m. CT, 9:00
a.m. MT and 8:00 a.m. PT)

Calendar entries were sent
8
Explanation of Adjustment Reasons
This document is intended to be used in conjunction with the Adjustment Matrix
which is Exhibit II in the ECCHO rules. See www.eccho.org/rules for access to the
complete ECCHO rules or the Matrix as a standalone document.
Adjustment Reason
Non Conforming Image
(NCI)
Image Missing
Ineligible item
Invalid RT
Mis-matched MICR
Not our Item
Non-negotiable item/Non
Cash Item
Duplicate
Amount Error – Legal
amount
 Encoding Error
 Misread
Entry in Error
Adjusting Errors
Settlement
Warranty Indemnity
Claims
Rule 8 & 9 Claim
Disclaim – Rule 8 & 9
Unauthorized RCC
Warranty Claim
Explanation
Item fails to meet image quality standards, contains an invalid
or undefined routing number or invalid data for specific file type
or the item is ineligible for image clearing.
Items in which the MICR information associated with the item
does not match the MICR information reflected on the image.
Where the full MICR line of one item or multiple items has
been misaligned with the image of another item or a sequence
of items rather than a misread of a character or characters on
the same item. Encoding error of amount only and/or incorrect
character(s) in MICR field is not a mis-match MICR.
In forward collection process an item that contains routing
transit number that does not belong to institution that receives
item or institution authorized to process the item.
In return collection process an item that was not indorsed,
either physically or electronically by institution that receives the
return item
“Negotiability” is defined in the UCC (see UCC) and “Non-Cash
Items” are defined in Reg CC which says it is an item that
would otherwise be check except for certain circumstances
(See Reg CC). Examples include item that enters collection
stream in error including empty carrier, control document,
deposit/withdrawal ticket, pay stub or mutilated item, item not
encoded with magnetic ink.
A party received an item which it was asked to pay based on
an item that it already has paid.
An item was clearly encoded for an amount different than the
legal (written) amount or the written amount differs from the
stated amount in the ANSI X9.100-187 image cash/return
letter.
An accounting entry was incorrectly made, either for the wrong
amount or to the wrong party.
A claim for any breach of warranty under ECCHO, UCC or Reg
CC
See ECCHO rules for explanation.
See ECCHO rules for explanation
Person on whose account RCC is drawn did not authorize the
issuance of the check in the amount or payee stated on the
9
Late Return Claim
Late Return Disclaim
Request for Information
Request for original or
sufficient copy
Other
Disposition of Item
Source of Receipt
Image Cash Letter
Difference
Missing
Out of Balance
Expedited Recredit
Adjustment Reversal
Claim of Damage due to
Under-encoding
Pricing Error Adjustment
Wrong Payee Credit
Return Adjustment
check.
Item was returned late.
Dispute of a late return claim.
Requesting information regarding a forward, return or
adjustment.
Typically used to determine whether a Check 21 claim is valid.
Adjustment reason not specifically identified
Request to identify where an item was presented/returned,
including the routing number, and the associated cash/return
letter information (date, total, bundle and sequence number).
Request to identify the source of receipt of an item, including
the routing number, and the associated cash/return letter
information (date, total, bundle and sequence number).
Investigate cash/return letter credit for which the depositor
believes was functioned for an incorrect amount.
Check 21 expedited recredit claim (see Reg CC).
Ability to adjust an item that was incorrectly adjusted. Can
only be used when Party Making Claim has reference number
for adjustment to reverse.
Paying Bank disclaims item in which BOFD under encoded
item to protect Paying Bank from loss.
Initiated by Federal Reserve at request Bureau of Public Debt
(BPD) when it determines bond was redeemed for incorrect
amount or was processed for incorrect amount.
Ability to pass credit to correct maker’s account.
Ability to adjust a return item that was incorrectly returned.
10