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FED PUBLISHES CONSUMER ELECTRONIC CHECK GUIDE
The Board of Governors of the Federal Reserve has published a new guide to help consumers understand their rights and responsibilities associated with the increasing practice of check electronification at the point-of-sale and lockbox locations.
The guide "When is a Check not a Check - Electronic Check Conversion" describes electronic check conversion and associated disclosures, the differences between a regular check transaction and electronic check conversion, consumers' rights in an electronic check conversion transaction, and what consumers can do if they have problems with such transactions.
The guide may be downloaded free from the Board's Web site(www.federalreserve.gov/pubs/checkconv), or print copies can be ordered (first 100 copies of the order are free).
Last year, the Federal Reserve clarified certain portions of Regulation E covering electronic transactions. Part of those clarifications dealt with conversion of checks to ACH debit transactions and stated that businesses were obligated only to notify the consumer that their checks would be converted to electronic transactions. This "notice equates to authorization" stance has fueled check-to-ACH debit conversion since it substantially reduces merchant processing costs.
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