Amendments to Regulation CC Defining Remotely Created Checks Approved
November 23, 2005
Circular No. 11750

To All Depository Institutions and Others Concerned
in the Second Federal Reserve District:

The Federal Reserve Board has approved amendments to its Regulation CC that define "remotely created checks" and create transfer and presentment warranties to shift liability for an unauthorized remotely created check to the institution where it is first deposited.

The amendments are effective on July 1, 2006.

In place of a signature, a remotely created check generally bears a statement that the customer authorized the check or bears the customer's printed or typed name. Remotely created checks can be useful payment devices but are vulnerable to fraud because they do not bear a signature or other readily verifiable indication that payment has been authorized.

In order to help reduce the potential for fraud, the amendments to Regulation CC create transfer and presentment warranties under which any bank that transfers or presents a remotely created check would warrant that the check is authorized by the person on whose account the check is drawn.

The warranties would apply only to banks and would ultimately shift liability for losses attributable to an unauthorized remotely created check to the depositary bank. These amendments would not affect the rights of checking account customers, as they are not liable for unauthorized checks drawn on their accounts.

Press release offsite
Board notice offsite pdf

Adrianne G. Threatt
Legal Division
(202) 452-3554

Joshua H. Kaplan
Legal Division
(202) 452-2249