FRCC_20170928_omb

Supporting Statement for the
Disclosure Requirements Associated with Regulation CC
(FR CC; OMB No. 7100-0235)
Availability of Funds and Collection of Checks
(Docket No. R-1409; RIN 7100-AD68)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
with revision, the Disclosure Requirements Associated with Regulation CC (FR CC; OMB No.
7100-0235) which implements the Expedited Funds Availability Act of 1987 (EFA Act)1 and the
Check Clearing for the 21st Century Act of 2003 (Check 21 Act)2. Regulation CC - Availability
of Funds and Collection of Checks3 requires banks4 to make funds deposited in transaction
accounts available within specified time periods, disclose their availability policies to customers,
and begin accruing interest on such deposits promptly. The disclosures are intended to alert
customers that their ability to use deposited funds may be delayed, prevent unintentional (and
potentially costly) overdrafts, and allow customers to compare the policies of different banks
before deciding at which bank to deposit funds. Regulation CC also requires notice to the
depositary bank and to a customer of nonpayment of a check. Model disclosure forms, clauses,
and notices are appended to the regulation to ease compliance.
The Board adopted a final rule that revises the disclosure requirements in sections
229.31(c) and 229.33(h) of Regulation CC. Section 229.31 of the final rule imposes a notice of
nonpayment requirement on paying banks that determine not to pay a check, both paper and
electronic, in the amount of $5,000 or more. Section 229.33(h) requires a depositary bank to
notify its customer if the depositary bank receives a returned check, notice of nonpayment, or
notice of recovery under section 229.35(b). The revisions are effective July 1, 2018. Although
Regulation CC applies to all banks, the Board accounts for only the burden imposed on the 997
state member banks and uninsured state branches and agencies of foreign banks that it
supervises. The estimated total annual burden for the FR CC is 190,605 hours. The proposed
revisions would decrease the burden by 8,059 hours to 182,546 hours.
Background and Justification
The EFA Act requires banks to provide customers and potential customers specific
written notices and disclosures on the occurrence of specific events, such as opening an account,
delaying availability of the proceeds of a deposited check beyond the usual availability date,
changing the bank’s funds availability policies, or in response to a customer’s request. The
Check 21 Act requires banks to provide a consumer awareness disclosure regarding substitute
1

See 12 U.S.C. 4001 et seq.
See 12 U.S.C. 5001 et seq.
3
See 12 CFR Part 229.
4
For purposes of Regulation CC, banks are commercial banks, savings associations, credit unions, and U.S.
branches and agencies of foreign banks.
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checks in certain circumstances.5 In addition, if a consumer uses the special procedure that the
Check 21 Act provides to resolve errors associated with substitute checks, the Check 21 Act
requires the consumer’s bank to provide a notice to the consumer regarding disposition of the
consumer’s claim. All of the notice and disclosure requirements of Regulation CC, which are
discussed in more detail below, are found expressly in the EFA Act or the Check 21 Act, except
for the notice of a delay under a case-by-case hold policy and the notice of a returned check.
As required by the EFA Act, the Board has published model disclosure forms and clauses
to facilitate compliance with the disclosure requirements of that law. The EFA Act specifically
provides that banks are not required to use these model forms and clauses. However, a bank that
uses one of the model forms appropriately is deemed to be in compliance with the EFA Act
disclosure requirements. As required by the Check 21 Act, the Board published a model
disclosure that a bank may, at its option, use as a safe harbor to satisfy the general consumer
awareness disclosure requirements of that law. The Board also published model notices that
banks may use to satisfy their notice obligations regarding substitute check error resolution
claims, but neither the Check 21 Act nor Regulation CC provide a safe harbor for using these
notices.
Description of Information Collection
Specific availability policy disclosure (section 229.16) and Initial disclosures (section
229.17)
Before accepting a deposit to open a new transaction account, banks must provide written
disclosures stating when deposited funds generally will be available for withdrawal, referred to
as a specific availability-policy disclosure. The disclosure must reflect the availability policy
followed by the bank in most cases, that is, as to most transaction accounts and most deposits
into those accounts. The disclosure must include, to the extent applicable, a description of
 the categories of deposits or checks the bank uses when it delays availability, how to
determine into which category a check or deposit falls, and when each category of check or
deposit is available for withdrawal
 any of the exceptions permitted by Regulation CC to the availability requirements of the
regulation that may be invoked by the bank
 any case-by-case policy of delaying availability longer than the time periods stated in the
specific availability policy, if the specific availability policy makes funds available for
withdrawal sooner than required by Regulation CC
 a description of how to differentiate between proprietary and nonproprietary automatic teller
machines (ATMs) if the bank’s availability policy differs between the two
When a bank receives a written request by mail to open an account and the request
includes a deposit, the bank may open the account, but must mail the disclosures no later than the
5

To facilitate check truncation and electronic check exchange, the Check 21 Act authorizes a new negotiable
instrument called a substitute check and provides that a properly prepared substitute check is the legal equivalent of
the original check for all purposes. A substitute check is a paper reproduction of the original check that can be
processed just like the original check. The Check 21 Act does not require any bank to create substitute checks or to
accept checks electronically.

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next business day following the banking day on which the deposit was received. When a
telephone request is made to open an account and includes a request to transfer funds from
another account to make the initial deposit, the initial disclosures must be mailed no later than
the next business day following the banking day on which the request was made.
Disclosure of specific availability policy to any person upon request (sections 229.16
and 229.18(d))
Section 229.18(d) provides that a bank must provide the specific availability-policy
disclosure described in section 229.16, to any person who makes an oral or written request
regarding the policy.
Longer delays on a case-by-case basis: Notice in specific policy disclosure (section
229.16(c))
If a bank has a policy of generally making funds available for withdrawal sooner than
required under Regulation CC, but delaying availability on a case-by-case basis, the customer
must receive not only advance notice of the policy (as described above), but also notice each
time a delay is imposed. The notice must include the date of deposit, the amount being delayed,
and the date funds will be available for withdrawal. If the notice is not provided at the time of
deposit, it must be mailed or delivered no later than the first business day following the banking
day of the deposit.
Notice of exceptions (section 229.13(g))
Regulation CC permits banks to invoke certain exceptions to the availability schedules
required by the regulation. Whenever a bank invokes such an exception, it must notify the
customer in writing (special rules apply to exceptions pertaining to large dollar deposits and
redeposited checks into nonconsumer accounts, as well as an exception pertaining to repeated
overdrafts). The notice must include the date of deposit, the amount being delayed, the reason
the exception was invoked, and when funds will be available for withdrawal. If the notice is not
provided at the time of deposit, it must be mailed or delivered by the later of: the first business
day following the banking day of the deposit, or the first business day following the day the bank
becomes aware of the facts upon which the exception hold is based.
Notice on preprinted deposit slips (section 229.18(a))
The preprinted deposit slip notice must inform the customer, on the face of the deposit
slip, that deposits may not be available for immediate withdrawal. This notice is a standardized,
machine-generated form and does not change from one individual account to another; thus, the
burden for this requirement is negligible.

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Locations where employees accept consumer deposits (section 229.18(b)) and
Automated teller machines (ATMs) (section 229.18(c))
A bank must post conspicuously in each location where consumers may make deposits a
notice of its funds availability policy for consumer accounts. The notice must be posted so that
consumers are likely to see it prior to making a deposit. A bank must also ensure that a notice is
posted at all ATMs accepting deposits for the bank that ATM deposits may not be available for
immediate withdrawal. Such notice may be posted on a sign, on the screen of the ATM, or
included on the deposit envelopes provided at the ATM.
Notice of changes in policy (section 229.18(e))
A bank is required to send consumer account holders notice of changes in its availability
policy at least thirty days before the change becomes effective. However, where a change in
policy results in faster availability, the notice may be sent no later than thirty days after the
change.
If a bank provides its customers with a list of ATMs in its availability policy (to fulfill the
requirement that it explain its availability policy for proprietary and nonproprietary ATMs), it
must update the list annually if any changes occurred during the year.
Notices of nonpayment (section 229.33(a) and (d))
Notification to banks - If a bank on which a check is drawn in an amount of $2,500 or
more determines not to pay the check, the bank must notify the depositary bank by 4:00 p.m. on
the second business day after the day of presentment.
Notification to customer - If the depositary bank receives a returned check or notice of
nonpayment, regardless of the amount, it must send notice to its customer generally by midnight
of the banking day following the banking day on which it received the returned check or notice
(a longer time than may be deemed reasonable in some cases). This requirement is considered
not to cause the bank additional burden because, were the requirement not to exist, banks
presumably would nonetheless provide a similar notification to customers in the usual and
customary course of their business.
Expedited recredit for consumers (sections 229.54(a) and (b)(2))
This section of the rule provides that a consumer may make an expedited recredit claim
with respect to a substitute check if the consumer asserts in good faith that (1) the bank holding
the consumer’s account charged that account for a substitute check that was provided to the
consumer (although the consumer need not be in possession of the substitute check at the time he
or she submits a claim), (2) the substitute check was not properly charged to the consumer

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account or the consumer has a “warranty claim”6 with respect to the substitute check, (3) the
consumer suffered a resulting loss, and (4) production of the original check or a sufficient copy
of the original check is necessary to determine whether or not the substitute check in fact was
improperly charged or whether the consumer’s warranty claim is valid.
The consumer’s claim must include certain information described in the Check 21 Act
and section 229.54 of Regulation CC.
Notices relating to consumer expedited recredit claims (validation, denial or
reversal) (section 229.54(e))
This notice is required when a bank validates, denies, or reverses a consumer’s recredit
claim. Although the statute does not explicitly discuss providing a notice when a bank validates
a claim, the bank’s ability to respond to a claim by determining that the claim is valid is implicit
in the “timing of the recredit” section of the statute (section 7(c)(2)(A)), which requires the bank
to provide a recredit the day after it determines that the consumer’s claim is valid.
If a bank determines that the consumer’s claim is invalid, the bank must provide the
consumer with the original check or a copy of the original check sufficient to determine the
validity of the claim and must demonstrate why the substitute check was properly charged to the
consumer account. The bank must either demonstrate that a charge was proper or explain why
the warranty claim is not valid, as appropriate in light of the consumer’s claim.
Expedited recredit claim for banks (section 229.55)
This section of the EFA Act provides that a bank may make a claim against an
indemnifying bank if (1) the claimant bank or a bank that the claimant bank has indemnified has
received a claim for expedited recredit from a consumer or would have been subject to such a
claim if the consumer account had been charged for the substitute check; (2) the claimant bank is
obligated to provide a consumer expedited recredit with respect to such substitute check or
otherwise has suffered a resulting loss; and (3) the production of the original check or a sufficient
copy of the original check is necessary to determine the validity of the charge to the consumer
account or the validity of any warranty claim connected with such substitute check.
The content requirements for an interbank expedited recredit claim essentially parallel
those for a consumer expedited recredit claim but also state that a bank that provides a copy of a
substitute check with its claim must take steps to ensure that such copy is not mistaken for a
legally equivalent substitute check or handled for forward collection or return. An indemnifying
bank may require the claim to be in writing and may permit the claimant bank to submit it
electronically. In addition, section 229.60 provides that banks involved in an interbank
expedited recredit claim under section 229.55 may vary the terms of that section by agreement,
but otherwise no person may vary the terms of subpart D by agreement.
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When a bank transfers, presents, or returns a substitute check for consideration (or any paper or electronic
representation of a substitute check), the bank makes two warranties (1) that the substitute check meets the
requirements for legal equivalence and (2) that no depository bank, drawee, drawer, or indorser will be asked for
payment based on a check that it already has paid. See 69 FR 1476 published on January 8, 2004.

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Consumer awareness (section 229.57)
This section of the EFA Act provides a description of the disclosure that banks must
provide to consumers to promote awareness of substitute checks. Banks are required to provide
a one-time consumer awareness disclosure at the time the customer relationship is initiated to
consumers who will routinely receive paid checks with their periodic account statements in
accordance with their deposit agreements. Banks also must provide the substitute check
consumer awareness disclosure (1) any time a consumer receives a substitute check in response
to a consumer’s request for a check or check copy or (2) any time a check that the consumer
deposited is later returned unpaid to the consumer in the form of a substitute check. Section
12(c) of the Check 21 Act requires the Board to publish model disclosures that banks can use to
satisfy the content requirements of the consumer awareness disclosure required by that section.
The statute provides that a bank that uses the model disclosure published by the Board to comply
with section 229.57 of the EFA Act shall be treated as complying with that section if it
accurately describes the bank’s policies and practices. The model disclosure explains in very
simple terms what a substitute check is, when the consumer expedited recredit right applies, and
what a consumer must do to exercise that right.
Proposed Revisions
On June 15, 2017, the Board published a final rule (82 FR 27552). The final rule is
effective July 1, 2018. The Board amended subparts A, C, and D of Regulation CC which
implements the EFA Act, the Check 21 Act, and the official staff commentary to the regulation.
In the final rule, the Board modified the current check collection and return requirements to
reflect the virtually all-electronic check collection and return environment and to encourage all
depositary banks to receive, and paying banks to send, returned checks electronically. The
Board has retained, without change, the current same-day settlement rule for paper checks. The
Board is also applying Regulation CC’s existing check warranties under subpart C to checks that
are collected electronically, and in addition, has adopted new warranties and indemnities related
to checks collected and returned electronically and to electronically-created items. The revised
disclosure requirements are found in sections 229.31(c) and 229.33(h).
Under 229.31(c) of the final rule, a paying bank is required to provide a notice of
nonpayment if a paying bank determines not a pay a check in the amount of $5,000 or more.
(Return of the check itself would continue to satisfy the notice requirement if the return meets
the timeframe requirement for notice.) Regulation CC also requires a depositary bank to notify
its customer when it receives a returned check or notice of nonpayment related to that customer’s
account. Under section 229.33(h) of the final rule, the depositary bank must notify its customer
when the bank receives a notice of recovery under 229.35(b). The Board expects that its final
rule will reduce the number of notices that banks must send. The Board has updated its annual
frequency estimates by sampling returned check volumes sent through the Reserve Banks to
determine the estimated average annual number of (1) total returned items and (2) returned items
over $5,000 a Reserve Bank customer receives, which would trigger the notice of nonpayment
and customer notification requirements.

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Time Schedule for Information Collection
The notice and disclosure requirements for Regulation CC are triggered by specific
events and must be provided to consumers within the time periods established by the law and
regulation. There is no reporting form associated with the requirements of Regulation CC;
disclosures or notifications, pertaining to a particular transaction or consumer account, are not
publicly available. Model disclosure forms, clauses, and notices are appended to the regulation
to ease compliance.
Legal Status
The Board’s Legal Division has determined that the EFA Act and the Check 21 Act
authorize the Board to issue regulations to carry out the provisions of those Acts (12 U.S.C. 4008
and 12 U.S.C. 5014, respectively). All banks are required to comply with Regulation CC, thus
the information collection is mandatory. However, the information that Regulation CC requires
of consumers who are making an expedited recredit claim is to obtain a benefit. Because the
Board does not collect any information, no issue of confidentiality arises. However, if, during a
compliance examination of a financial institution, a violation or possible violation of the EFA
Act or the Check 21 Act is noted then information regarding such violation may be kept
confidential pursuant to section (b)(8) of the Freedom of Information Act (5 U.S.C. 552(b)(8)).
Consultation Outside the Agency
On March 25, 2011, the Board published a notice of proposed rulemaking in the Federal
Register (76 FR 16862) for public comment. The comment period expired on June 3, 2011.
Based on the analysis of the comments received on the 2011 proposed rulemaking, the Board
revised its proposed amendments and requested comment in the reproposed rulemaking. On
February 4, 2014, the Board published a notice of proposed rulemaking (reproposal) in the
Federal Register (79 FR 6674) for public comment. The comment period expired on May 2,
2014. The Board received 40 comments on the proposed rule; however, none specifically
addressed the Paperwork Reduction Act (PRA) analysis. On June 15, 2017, the Board published
a final rule in the Federal Register (82 FR 27552). The final rule is effective on July 1, 2018.
Estimate of Respondent Burden
The estimate of the burden per response (i.e., per instance of disclosure) caused by a
particular notice or disclosure requirement depends on several factors, including whether the
notice is machine-generated and whether it is customer-specific. The notices given at account
opening and upon request and the notices posted where consumers make deposits are disclosures
concerning the bank’s policy. They are machine-generated and are not customer-specific; thus
the burden per response is minimal. The notice of changes in policy (including the annual notice
updating the ATM list, if necessary) is not customer-specific, but likely requires more time to
prepare. Also, the timing for these is more uncertain because they are event-triggered and not
given a standard schedule; therefore, the burden per response is greater than for other notices.
Notices given when a bank invokes a case-by-case hold or an exception permitted by the
regulation are customer-specific; therefore the burden per response associated with these notices

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is slightly greater. The notice of nonpayment is also customer-specific; however, it is machinegenerated. Therefore, the burden per response associated with this notice is less than the burden
per response associated with other customer-specific notices.
For purposes of the PRA, no paperwork burden is associated with the recordkeeping
requirement of Regulation CC. Section 229.21(g) requires banks to retain evidence of
compliance for no less than two years but does not specify the kind of records that must be
retained for this purpose.
The total current annual burden for FR CC is estimated to be 190,605 hours and with the
proposed changes is estimated to decrease by 8,059 hours to 182,546 hours. These disclosure
requirements represent 1.45 percent of total Federal Reserve paperwork burden.

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Number of
respondents

FR CC Current

Annual
frequency

Estimated
average time
per response

Estimated
annual burden
hours

Disclosure
Bank burden
Sections 229.16 and 229.17
Specific availability policy
disclosure and Initial disclosures

997

500

1 minute

8,308

Section 229.16(c)
Longer delays on a case-by-case
basis: Notice in specific policy
disclosure

997

700

3 minutes

34,895

Section 229.13(g)
Notice of exceptions

997

2,000

3 minutes

99,700

Sections 229.18(b) and 229.18(c)
Locations where employees accept
consumer deposits, and ATMs

997

1

15 minutes

249

Section 229.18(e)
Annual notice of new ATMs

997

1

5 hours

4,985

Section 229.18(e)
Changes in policy

100

2

20 hours

4,000

Sections 229.33(a) and (d)
Notice of nonpayment

997

890

1 minute

14,789

Section 229.54
Expedited recredit for consumers

997

35

15 minutes

8,724

Section 229.55
Expedited recredit for banks

997

15

15 minutes

3,739

Section 229.57
Consumer awareness

997

300

1 minute

4,985

Consumer burden
Section 229.54(b)(2)
Expedited recredit claim notice

997

25

15 minutes

6,231

Total

190,605

9

Number of
respondents7

FR CC Proposed
Disclosure
Bank burden
Sections 229.16 and 229.17
Specific availability policy
disclosure and Initial disclosures
Section 229.16(c)
Longer delays on a case-by-case
basis: Notice in specific policy
disclosure
Section 229.13(g)
Notice of exceptions
Sections 229.18(b) and 229.18(c)
Locations where employees accept
consumer deposits, and ATMs
Section 229.18(e)
Annual notice of new ATMs
Section 229.18(e)
Changes in policy
Section 229.31(c)
Notice of nonpayment on paying
bank
Section 229.33(h)
Notification to customer
Section 229.54
Expedited recredit for consumers
Section 229.55
Expedited recredit for banks
Section 229.57
Consumer awareness
Consumer burden
Section 229.54(b)(2)
Expedited recredit claim notice

Annual
frequency

Estimated
average time
per response

Estimated
annual burden
hours

997

500

1 minute

8,308

997

700

3 minutes

34,895

997

2,000

3 minutes

99,700

997

1

15 minutes

249

997

1

5 hours

4,985

100

2

20 hours

4,000

997

35

1 minute

582

997

370

1 minute

6,148

997

35

15 minutes

8,724

997

15

15 minutes

3,739

997

300

1 minute

4,985

997

25

15 minutes

6,231

Total

182,546

Change

(8,059)

7

Of these respondents, 631 are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/contracting/getting-started-contractor/make-sureyou-meet-sba-size-standards/table-small-business-size-standards.

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The total cost to the public for this information collection is estimated to decrease from
$10,284,139 to $9,841,700 with the proposed revisions.8
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
Since the Board does not collect any information, the cost to the Federal Reserve System
is negligible.

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For bank burden, the total cost to the public was estimated using the following formula: percent of staff time,
multiplied by annual burden hours, multiplied by hourly rates (30% Office & Administrative Support at $18, 45%
Financial Managers at $67, 15% Lawyers at $67, and 10% Chief Executives at $93). Hourly rates for each
occupational group are the (rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS),
Occupational Employment and Wages May 2016, published March 31, 2017,
www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using the BLS Occupational Classification
System, www.bls.gov/soc/. For consumer burden, the average consumer cost of $26 is estimated using data from the
BLS Economic News Release (USDL-16-0462) www.bls.gov/news.release/cewqtr.nr0.htm.

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