Substitute check indemnity.

CFR · 2024-01-01 · US · Title 12

(a) (2) A bank that rejects a check submitted for deposit and returns to its customer a substitute check (or a paper or electronic representation of a substitute check) shall indemnify the recipient as described in paragraph (a)(1) of this section regardless of whether the bank received consideration. (b) (i) If the loss resulted from a breach of a substitute check warranty provided under § 229.52, the amount of the indemnity shall be the amount of any loss (including interest, costs, reasonable attorney's fees, and other expenses of representation) proximately caused by the warranty breach. (ii) If the loss did not result from a breach of a substitute check warranty (A) The amount of the loss, up to the amount of the substitute check; and (B) Interest and expenses (including costs and reasonable attorney's fees and other expenses of representation) related to the substitute check. (2) (ii) Nothing in this paragraph (b)(2) reduces the rights of a consumer or any other person under the U.C.C. or other applicable provision of state or federal law. (3) (i) If an indemnifying bank produces the original check or a sufficient copy, the indemnifying bank shall— (A) Be liable under this section only for losses that are incurred up to the time that the bank provides that original check or sufficient copy to the indemnified person; and (B) Have a right to the return of any funds it has paid under this section in excess of those losses. (ii) The production by the indemnifying bank of th

official document · source cfr-2024 · id 12:§ 229.53