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The
Uniform Commercial Code permits the process of check drafting by defining signature in the following regulation: Uniform Commercial Code, Title 1, Section 1-201 (39). This regulation only makes check drafting possible, not "required." Your bank may deny your items for deposit if they have reason
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Check drafting is creating a valid legal copy of the customer's check, on the customer's behalf. Because it is created by the merchant, no signature is required. Instead, a signature disclaimer or facsimile is entered in the signature blank. A check draft is typically for deposit only. This allows
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issued a regulation (effective July 1, 2006) shifting responsibility for payment of fraudulent demand drafts from the bank it is drawn on to the bank that accepts it as a deposit. Most recent developments in check drafting, which helps to facilitate checks by phone, checks by fax and online check
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to be suspicious. Suspicious items are covered in
Regulation CC 229.13, Exceptions. Authorization is indicated on a check draft in the signature blank, usually by a statement such as the following: "This draft is preauthorized by your depositor, no signature required.".
317:. Banks report that demand draft fraud is becoming more common. Under the current Federal Reserve Board guidelines the customer has a time frame of 90 days from the time the check was deposited to dispute the transactions.
281:. Instead, they bear a legend statement "Authorized by Drawer". This type of instrument is usually used by credit card companies, utility companies, or telemarketers. Remotely created checks are vulnerable to fraud.
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Remotely created checks are orders of payment created by the payee and authorized by the customer remotely, using a telephone or the
Internet by providing the required information including the
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regulations, check drafting allows outbound telemarketers to accept these types of phone payments if they comply with the FTC Regulations 16 CFR 310 in regard to proper record keeping.
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disputes, consumers are not often given any funds back until after investigation finds that the draft was unauthorized. In addition, filing a dispute frequently requires a
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293:. The checks also allow consumers to pay monthly bills by having them debited automatically out of their accounts, rather than having to write a new check each month.
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300:, and large companies also commonly use them. Demand drafts are also a popular method for lending institutions to attempt to collect on overdue loans.
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Prepared statement of the
Federal Trade Commission Presented by Jodie Bernstein before the House banking committee. April 15, 1996.
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signature, since this is the only way one bank can dispute a paper item with another bank.
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code from a valid check. They do not bear the signatures of the customers like ordinary
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Demand draft fraud can be frustrating for consumers, because unlike credit card or
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http://www.federalreserve.gov/boarddocs/press/bcreg/2005/20051121/attachment.pdf
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650:"Check 21: Substitute Checks, Electronic Processing, and What It Means to You"
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Demand drafts are frequently used to purchase items over the phone, from
532:"Supreme Law Library : Reference : U.C.C. Code : ucc1"
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607:"Telemarketing Sales Rule 16 CFR 310.5 – Recordkeeping requirements"
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Association for
Financial Professionals. October 5, 2005.
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Demand drafts are frequently used by consumers instead of
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fraud by knowing the individual's bank account numbers.
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507:"Demand Draft Fraud | Federal Trade Commission"
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payments is the new "Substitute Check Law" known as
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482:"What are the rules for paper drafts on customers?"
150:. Unsourced material may be challenged and removed.
396:federalreserve.gov. Retrieved on July 11, 2007.
70:The examples and perspective in this article
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313:Demand drafts entail a large potential for
50:Learn how and when to remove these messages
228:Learn how and when to remove this message
210:Learn how and when to remove this message
108:Learn how and when to remove this message
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652:. Ftc.gov. 2009-04-24. Archived from
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385:Shonk, Krista J. November 9, 2005.
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484:. Bankersonline.com. Archived from
348:transactions that are governed by
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457:"U.C.C. - ARTICLE 1-§ 1-201"
31:This article has multiple issues.
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463:from the original on 2013-01-28
436:Retrieved on December 07, 2013.
135:needs additional citations for
39:or discuss these issues on the
534:. Supremelaw.org. 1997-10-21.
416:. Retrieved on July 11, 2007.
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427:Thieves Exploit Demand Draft.
559:. Frwebgate.access.gpo.gov.
387:America's Community Bankers.
84:, discuss the issue on the
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159:"Remotely created check"
246:remotely created checks
304:Fraud and regulation
144:improve this article
90:create a new article
82:improve this article
72:may not represent a
609:. law.cornell.edu.
459:. Law.cornell.edu.
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557:"Exceptions"
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200:January 2018
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142:Please help
137:verification
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98:January 2018
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517:2018-01-10
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368:References
336:Regulation
256:tele-check
170:newspapers
36:improve it
584:. NACHA.
330:notarized
86:talk page
42:talk page
675:Category
634:Archived
611:Archived
586:Archived
561:Archived
536:Archived
511:Archived
461:Archived
430:Archived
410:Archived
390:Archived
362:Check 21
80:You may
681:Cheques
344:Unlike
268:e-check
240:In the
184:scholar
279:checks
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350:NACHA
315:fraud
309:Fraud
266:, or
191:JSTOR
177:books
88:, or
275:MICR
254:, a
163:news
346:ACH
326:ACH
285:Use
146:by
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