Page 1 Electronic Check Representment and How the System Works
Page 2 The Representment Process
Page 3 Frequently Asked Questions

The RCK Rule:
Frequently Asked Questions

Answers to some frequently asked consumer questions on electronic check representment are provided below:

Q. How does electronic check collection work?

A. If your check is returned for insufficient funds (NSF), the Client or company you wrote the check to may resubmit (re-present) the check electronically instead of redepositing the paper check.

Q. How does the Client obtain permission to debit my account for an electronically re-presented check?

A. The Client will provide notice of its electronic re-presentment policy before accepting your check.

Q. Who can electronically debit my account for an NSF check?

A. Clients, billers and financial institutions have the option of debiting your account electronically for checks that have been returned NSF, as long as the proper notice has been provided to you in advance.

Q. How will an electronically represented check appear on my statement?

A. Listed with electronic transactions, the re-presented check entry will contain the name of the payee, the description "'REDEPCHECK", the check serial number (optional until September 19, 1999) and the check amount.

Q. What happens to my check when the electronic process is used instead of paper?

A. The Client or collection agent retains your physical check for 90 days, and a copy is kept for seven years.

Q. What are the benefits to me of electronic check re-presentment?

A. The majority of NSF checks are honest mistakes by the check writer, but the record still reflects a "bad check." Electronic re-presentment quickly clears up these mistakes and allows you to continue to write checks.

 

Q. Our memberlcustomers are receiving represented checks as PPD debit items. Should we post or return these items?

1. Many Clients have continued to utilize the advantages of the ACH Network to collect NSF checks following NACHA’s Electronic Check Council pilot. Financial institutions can post these items providing the account number indicated for the transaction is a valid account number for your financial institution.

If your customer or member advises you that they did not authorize the transaction, execute an Affidavit of Unauthorized ACH Debit and return the debit R 10, Customer Advises Not

Authorized. initiating a returned check fee as a separate transaction. If your customer or member did not authorize the transaction for the fee, it can also be returned as R 10, Not Authorized, once a properly completed affidavit is secured.

NOTE: Recently adopted -NACHA Rules Amendments will provide for a new Standard Entry Class code, RCK (Represented Check), and will permit collection of these checks through the ACH. Effective dates for these amendments are September 18, 1998 and September 1 7, 1999.

 RCK RULES AMENDMENT STATUS:

While the NACHA Operating Rules do not currently support RCK transactions or the use of the PPD format Prearranged Payments and Deposit) to represent checks, as an ACH debit item- thesetransactions will be. permitted when the Rules Amendments, adopted- in March, 1998, become effective

An Interim Rule effective from September 18, 1998 through September 16, 1999, will permit collection of represented checks through the ACH using the PPD format, The final Rule, effective September 17, 1999, will create a new SEC (Standard Entry Class) code, RCK (Represented Check), for collection of these items through the ACH.

Only consumer items less than $ 2500 and dated less than 180 days from transmission of the entry may be represented through the ACH. Written authorization will not be required to represent the NSF check. Notice to the consumer at the point of sale is required. Written authorization will be required to collect returned check fees from the consumer.

The Source of this document (Pages 9-12) is The Payment Systems Network Fax On Demand line at 1-888--988-7761 document number 9200 is a listing of all available documents. The Payment Systems Network is a regional ACH association.

The Interim Rule will not require RDFIs to make software changes as the items will continue to utilize the PPD code. "REDEPCHECK" must be placed in the Company Batch/Header Record. Under the Interim Rule, check serial numbers will be sent with transactions but will not be required as a descriptive on the statement. Return Reason Codes will remain the same.

These items will be subject to applicable NACHA Operating Rules, the Uniform Commercial Code (UCC) and Regulation CC. Checks represented as ACH transactions will not be subject to the EFTA or Regulation E. (Regulation E specifically excludes from coverage any transfer of funds originated by check or similar paper instrument). Specific warranties as to the eligibility of the item's) will be required of the ODFI.

Once the RCK SEC Code is adopted - the PPD format may not be used for represented checks: now distinct Return Reason Codes will be used to return ineligible items: the RDFI will be required to print the check serial number on the consumers statement.

Complete information on the RCK Rule Amendments is available by requesting Fax On Demand Documents 3000 and 3004. Training on these and other electronic commerce issues will be available throughout the summer and fall as part of PSN's "Hot Topics" workshops and PSN telephone seminars.

Please contact Linda Schou, AAP, PSN Technical Director, at 407/661-5824 with questions concerning the RCK Rules Amendment or representment of checks through the ACH.

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