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Article 2. Disclosure Of Delayed Availability Policy of California Financial Code >> Division 1.1. >> Chapter 12. >> Article 2.
As used in this article:
(a) "Depository institution" means any of the following:
(1) Any insured bank as defined in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.) or any bank which is eligible to make application to become an insured bank under Section 5 of the act.
(2) A mutual savings bank as defined in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.) or any bank which is eligible to make application to become an insured bank under Section 5 of the act.
(3) A savings bank as defined in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.) or any bank which is eligible to make application to become an insured bank under Section 5 of the act.
(4) An insured credit union as defined in Section 101 of the Federal Credit Union Act (12 U.S.C. Sec. 1751 et seq.) or any credit union which is eligible to make application to become an insured credit union pursuant to Section 201 of that act.
(5) Any member as defined in Section 2 of the Federal Home Loan Bank Act (12 U. S.C. Sec. 1421 et seq.).
(6) Any insured institution as defined in Section 401 of the National Housing Act (12 U.S.C. Sec. 1701 et seq.) or any institution which is eligible to make application to become an insured institution under Section 403 of that act.
(b) "Deposit account" means an account in a depository institution on which the account holder is permitted to make withdrawals from time to time in person by negotiable or transferable instrument, payment orders of withdrawal, telephone transfers, or other similar items for the purpose of making payments or transfers to third persons or others. The term includes demand deposits, negotiable order of withdrawal draft accounts, savings deposits subject to automatic transfers, share draft accounts, and all savings deposits and share accounts, other than time deposits.
(a) "Depository institution" means any of the following:
(1) Any insured bank as defined in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.) or any bank which is eligible to make application to become an insured bank under Section 5 of the act.
(2) A mutual savings bank as defined in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.) or any bank which is eligible to make application to become an insured bank under Section 5 of the act.
(3) A savings bank as defined in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.) or any bank which is eligible to make application to become an insured bank under Section 5 of the act.
(4) An insured credit union as defined in Section 101 of the Federal Credit Union Act (12 U.S.C. Sec. 1751 et seq.) or any credit union which is eligible to make application to become an insured credit union pursuant to Section 201 of that act.
(5) Any member as defined in Section 2 of the Federal Home Loan Bank Act (12 U. S.C. Sec. 1421 et seq.).
(6) Any insured institution as defined in Section 401 of the National Housing Act (12 U.S.C. Sec. 1701 et seq.) or any institution which is eligible to make application to become an insured institution under Section 403 of that act.
(b) "Deposit account" means an account in a depository institution on which the account holder is permitted to make withdrawals from time to time in person by negotiable or transferable instrument, payment orders of withdrawal, telephone transfers, or other similar items for the purpose of making payments or transfers to third persons or others. The term includes demand deposits, negotiable order of withdrawal draft accounts, savings deposits subject to automatic transfers, share draft accounts, and all savings deposits and share accounts, other than time deposits.
(a) Prior to opening a deposit account a depository
institution shall provide a written disclosure to the potential
customer of its general policy with respect to when a customer may
withdraw funds deposited by check or similar instrument into the
customer's deposit account.
(b) A depository institution shall furnish its customers preprinted deposit slips, envelopes for automatic teller machine deposits, or other individual notice bearing a conspicuous summary statement of its general policy with respect to when a customer may withdraw funds deposited by check or similar instrument into the customer's deposit account; and, in the case of a particular deposit by check or similar instrument into a deposit account for which funds may not be immediately available for withdrawal, provide specific notice of the time the customer may withdraw such funds.
(b) A depository institution shall furnish its customers preprinted deposit slips, envelopes for automatic teller machine deposits, or other individual notice bearing a conspicuous summary statement of its general policy with respect to when a customer may withdraw funds deposited by check or similar instrument into the customer's deposit account; and, in the case of a particular deposit by check or similar instrument into a deposit account for which funds may not be immediately available for withdrawal, provide specific notice of the time the customer may withdraw such funds.
For the purposes of computing the amount of interest or
dividends payable with respect to an interest-bearing deposit
account, a depository institution shall not delay beginning to
compute interest on funds deposited by check or similar instrument to
such an account beyond the date on which that depository institution
receives provisional credit for the check or similar instrument.
However, the payment of interest with respect to funds deposited by
check or similar instrument which is returned unpaid shall not be
required.
Except as otherwise provided in this section, any depository
institution which fails to comply with any requirement imposed
pursuant to this article shall be liable to the aggrieved party in an
amount equal to the sum of any actual damage sustained by the person
as a result of the failure; and, in the case of an individual action
an additional amount as the court may allow, except that the amount
shall not be less than fifty dollars ($50) or greater than five
hundred dollars ($500); or, in the case of a class action, such
amount as the court may allow, except that as to each member of the
class no minimum recovery shall be applicable, and the total recovery
in any class action or series of class actions arising out of the
same failure to comply by the same depository institution shall not
be more than the lesser of five hundred thousand dollars ($500,000)
or 1 percent of the net worth of the depository institution; and, in
the case of any successful action to enforce the foregoing liability,
the costs of the action, together with a reasonable attorney's fee
as determined by the court.
In determining the amount of award in any class action, the court
shall consider, among other relevant factors, the amount of any
actual damages awarded, the frequency and persistence of failures of
compliance, the resources of the depository institution, the number
of persons adversely affected, and the extent to which the failure of
compliance was intentional.
A depository institution may not be held liable in any action
brought under this section for a violation of this article if the
violation was not intentional and resulted from a bona fide error
notwithstanding the maintenance of procedures reasonably adapted to
avoid any such error. Examples of a bona fide error include, but are
not limited to, clerical, calculation, computer malfunction and
programming, and printing errors. An error of legal judgment with
respect to a person's obligations under this article shall not
constitute a bona fide error.
Any action under this section may be brought in any court of
competent jurisdiction, within one year from the date of the
occurrence of the violation.
No provision of this section imposing any liability shall apply to
any act done or omitted in good faith in conformity with any rule,
regulation, or interpretation thereof by the Federal Reserve Board or
in conformity with any interpretation or approval by an official or
employee of the Federal Reserve System duly authorized by the board
to issue interpretations or approvals under such procedures as the
board may prescribe therefor, notwithstanding that after any act or
omission has occurred, the rule, regulation, interpretation, or
approval is amended, rescinded, or determined by judicial or other
authority to be invalid for any reason.
The commissioner shall issue administrative regulations to
define a reasonable time for permitting customers to draw on items
received for deposit in the customer's account. It is the public
policy of this state to provide retail banking customers with the
right to withdraw against items deposited with any depository
institution located in this state within a reasonable period of time.
Pursuant to Section 1424, the commissioner shall promulgate
regulations which shall be reviewed annually to establish a
reasonable period of time within which a depository institution must
permit a customer to draw as a matter of right on an item which has
been received for deposit in the customer's account.
In determining what constitutes a reasonable period of time the
commissioner shall consider the following factors:
(a) The actual time for processing and transport between the depository and payer institutions.
(b) The fastest air transport time between depository and payer institutions to be used for purposes of setting the reasonable time for transport.
(c) The most expeditious route and means for processing of returned items.
(a) The actual time for processing and transport between the depository and payer institutions.
(b) The fastest air transport time between depository and payer institutions to be used for purposes of setting the reasonable time for transport.
(c) The most expeditious route and means for processing of returned items.
The commissioner is authorized to gather from depository
institutions such information as may be necessary for the formulation
and promulgation of the regulations required by Section 1424.
The first regulations issued pursuant to this article shall
be issued on or before July 1, 1984.
The commissioner is authorized to issue regulations which
provide for a different period of time for withdrawal as a matter of
right against deposited items, if there has been a determination that
the application of the regulations adopted pursuant to this article
would result in unsafe or unsound practices by a depository
institution subject to the regulatory jurisdiction of the
commissioner.
(a) Funds deposited in an account at a depository institution
shall be available on the second business day after the business day
on which those funds are deposited in the case of a cashier's check,
certified check, teller's check, or depository check subject to the
following:
(1) The check is endorsed only by the person to whom it was issued.
(2) The check is deposited in a receiving depository institution that is staffed by individuals employed by that institution.
(3) The check is deposited with a special deposit slip that indicates it is a cashier's check, certified check, teller's check, or depository check, as the case may be.
(4) The check is deposited into an account in the name of a customer that has maintained any account with the receiving depository institution for a period of 60 days or more.
(5) The face amount of the check is for five thousand dollars ($5,000) or less. In the case of funds deposited on any business day in an account at a depository institution by depository checks, the aggregate amount of which exceeds five thousand dollars ($5,000), this subdivision shall apply only with respect to the first five thousand dollars ($5,000) of the aggregate amount.
(b) Subdivision (a) does not apply to a depository check if the receiving depository institution reasonably believes that the check is uncollectible from the originating depository institution. For purposes of this subdivision, "reasonable cause to believe" requires the existence of facts that would cause a well-grounded belief in the mind of a reasonable person. These reasons shall include, but not be limited to, a belief that (1) the drawer or drawee of the depository check has been, or will imminently be, the subject of an order for relief in bankruptcy or placed in receivership or (2) the depository check may be involved in a fraud or in a scheme commonly known as "kiting." In these situations, the depository institution electing to proceed under this subdivision shall so notify the drawer and drawee no later than the close of the next business day following deposit of the depository check.
(c) For purposes of this section, the following terms have the following meanings:
(1) "Account" means any demand deposit account and any other similar transaction account at a depository institution.
(2) "Business day" means any day other than a Saturday, Sunday, or legal holiday.
(3) "Cashier's check" means any check that is subject to the following:
(A) The check is drawn on a depository institution.
(B) The check is signed by an officer or employee of the depository institution.
(C) The check is a direct obligation of the depository institution.
(4) "Certified check" means any check with respect to which a depository institution certifies the following:
(A) That the signature on the check is genuine.
(B) The depository institution has set aside funds that are equal to the amount of the check and will be used only to pay that check.
(5) "Depository check" means any cashier's check, certified check, teller's check, and any other functionally equivalent instrument, as determined by the Board of Governors of the Federal Reserve System or the commissioner.
(6) "Depository institution" has the meaning given in clauses (i) to (vi), inclusive, of Section 19(b)(1)(A) of the Federal Reserve Act.
(7) "Teller's check" means any check issued by a depository institution and drawn on another depository institution.
(d) Except for the specific circumstances and checks described in this section, this section is not intended to restrict or preempt the regulatory authority of the commissioner.
(e) In the event of a suspension or modification of any similar provisions in the federal Expedited Funds Availability Act, the effect of this section shall be similarly suspended or modified.
(1) The check is endorsed only by the person to whom it was issued.
(2) The check is deposited in a receiving depository institution that is staffed by individuals employed by that institution.
(3) The check is deposited with a special deposit slip that indicates it is a cashier's check, certified check, teller's check, or depository check, as the case may be.
(4) The check is deposited into an account in the name of a customer that has maintained any account with the receiving depository institution for a period of 60 days or more.
(5) The face amount of the check is for five thousand dollars ($5,000) or less. In the case of funds deposited on any business day in an account at a depository institution by depository checks, the aggregate amount of which exceeds five thousand dollars ($5,000), this subdivision shall apply only with respect to the first five thousand dollars ($5,000) of the aggregate amount.
(b) Subdivision (a) does not apply to a depository check if the receiving depository institution reasonably believes that the check is uncollectible from the originating depository institution. For purposes of this subdivision, "reasonable cause to believe" requires the existence of facts that would cause a well-grounded belief in the mind of a reasonable person. These reasons shall include, but not be limited to, a belief that (1) the drawer or drawee of the depository check has been, or will imminently be, the subject of an order for relief in bankruptcy or placed in receivership or (2) the depository check may be involved in a fraud or in a scheme commonly known as "kiting." In these situations, the depository institution electing to proceed under this subdivision shall so notify the drawer and drawee no later than the close of the next business day following deposit of the depository check.
(c) For purposes of this section, the following terms have the following meanings:
(1) "Account" means any demand deposit account and any other similar transaction account at a depository institution.
(2) "Business day" means any day other than a Saturday, Sunday, or legal holiday.
(3) "Cashier's check" means any check that is subject to the following:
(A) The check is drawn on a depository institution.
(B) The check is signed by an officer or employee of the depository institution.
(C) The check is a direct obligation of the depository institution.
(4) "Certified check" means any check with respect to which a depository institution certifies the following:
(A) That the signature on the check is genuine.
(B) The depository institution has set aside funds that are equal to the amount of the check and will be used only to pay that check.
(5) "Depository check" means any cashier's check, certified check, teller's check, and any other functionally equivalent instrument, as determined by the Board of Governors of the Federal Reserve System or the commissioner.
(6) "Depository institution" has the meaning given in clauses (i) to (vi), inclusive, of Section 19(b)(1)(A) of the Federal Reserve Act.
(7) "Teller's check" means any check issued by a depository institution and drawn on another depository institution.
(d) Except for the specific circumstances and checks described in this section, this section is not intended to restrict or preempt the regulatory authority of the commissioner.
(e) In the event of a suspension or modification of any similar provisions in the federal Expedited Funds Availability Act, the effect of this section shall be similarly suspended or modified.
