Sec. 229.10 of Regulation CC on Availability of Funds concerns Next-day availability. Sec. 229.12 (b) states that there may be further delays in availability for nonlocal checks, and Sec. 229.13 (b) states that additional delays are allowed for large deposits (i.E., over $5,000). These regulations are obviously meant to allow funds availability to be expedited while also giving the bank enough time to clear nonlocal and large items. However, Sec. 229.19 (c) (1) states that a bank is not prohibited from making funds available before the guideline limits and further, in 229.19 (c) (2), a bank has the right to charge a customer's account if the check is returned.
This loophole in Sec. 229.19 allows banks to be negligent and not verify items before making them available because the bank can then turn around and make the customer pay for the bank's omission. It would be easy for a bank to be negligent since the compliance of Regulation CC is a front line issue, that is, bank employees are instrumental in compliance and training is often lacking in this area, especially with banks who think they can be lax because of Sec. 229.19 (c) (2). Sec. 229.21 states that a bank has civil liability for failure to make funds available? No later? Than the guidelines indicate. However, there is no liablility for the even more irresponsible approach of making funds prematurely available.
For example, a question is what would most banks do concerning a check which is nonlocal and over $5,000, entering an account with an average balance of less than $1000, and which was deposited fraudulently, without the account holder's knowledge or consent or endorsement, which is not put on hold, where funds are released within two or three business days, and which later is charged to the customer because the item is returned. On top of this, what if the customer had asked for verification of funds before withdrawing, and the bank still failed to provide protections. What would most banks have done?
I am wondering how many more bank customers out there have had this happen to them and how many are Bank of America customers. I would think it is common.
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