BILL NUMBER: AB 1566	INTRODUCED
	BILL TEXT


INTRODUCED BY   Committee on Banking and Finance (Nava (Chair),
Evans, Fong, Fuentes, Mendoza, Ruskin, Swanson, and Torres)

                        MARCH 16, 2009

   An act to amend Section 4406 of the Commercial Code, relating to
financial institutions.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1566, as introduced, Committee on Banking and Finance. Banking:
disclosures.
   Existing law provides that a bank that sends or makes available
account statements to its customers either return or make available
items paid from the account, or provide information in the statement
sufficient to allow the customer reasonably to identify the items
paid. Existing law specifies that an account statement provides
sufficient information, if it includes the item number, the amount,
and the date of payment. The requirements that the account enable a
customer to "reasonably" identify items paid and specifying the
minimum information sufficient to identify the items paid will cease
to be operative on January 1, 2010.
   This bill would extend the operation of those provisions until
January 1, 2015.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 4406 of the Commercial Code, as amended by
Section 1 of Chapter 41 of the Statutes of 2005, is amended to read:
   4406.  (a) A bank that sends or makes available to a customer a
statement of account showing payment of items for the account shall
either return or make available to the customer the items paid or
provide information in the statement of account sufficient to allow
the customer reasonably to identify the items paid. The statement of
account provides sufficient information if the item is described by
item number, amount, and date of payment. If the bank does not return
the items, it shall provide in the statement of account the
telephone number that the customer may call to request an item, a
substitute check, or a legible copy thereof pursuant to subdivision
(b).
   (b) If the items are not returned to the customer, the person
retaining the items shall either retain the items or, if the items
are destroyed, maintain the capacity to furnish legible copies of the
items until the expiration of seven years after receipt of the
items. A customer may request an item from the bank that paid the
item, and that bank shall provide in a reasonable time either the
item or, if the item has been destroyed or is not otherwise
obtainable, a legible copy of the item. If the paid item requested by
a customer was presented as a substitute check, the bank shall
provide, in a reasonable time, either the substitute check or, if the
substitute check has been destroyed or is not otherwise obtainable,
a legible copy of the substitute check. A bank shall provide, upon
request, and without charge to the customer, at least two items,
substitute checks, or legible copies thereof, with respect to each
statement of account sent to the customer.
   (c) If a bank sends or makes available a statement of account or
items pursuant to subdivision (a), the customer shall exercise
reasonable promptness in examining the statement or the items to
determine whether any payment was not authorized because of an
alteration of an item or because a purported signature by or on
behalf of the customer was not authorized. If, based on the statement
or items provided, the customer should reasonably have discovered
the unauthorized payment, the customer shall promptly notify the bank
of the relevant facts.
   (d) If the bank proves that the customer failed, with respect to
an item, to comply with the duties imposed on the customer by
subdivision (c), the customer is precluded from asserting any of the
following against the bank:
   (1) The customer's unauthorized signature or any alteration on the
item if the bank also proves that it suffered a loss by reason of
the failure.
   (2) The customer's unauthorized signature or alteration by the
same wrongdoer on any other item paid in good faith by the bank if
the payment was made before the bank received notice from the
customer of the unauthorized signature or alteration and after the
customer had been afforded a reasonable period of time, not exceeding
30 days, in which to examine the item or statement of account and
notify the bank.
   (e) If subdivision (d) applies and the customer proves that the
bank failed to exercise ordinary care in paying the item and that the
failure contributed to loss, the loss is allocated between the
customer precluded and the bank asserting the preclusion according to
the extent to which the failure of the customer to comply with
subdivision (c) and the failure of the bank to exercise ordinary care
contributed to the loss. If the customer proves that the bank did
not pay the item in good faith, the preclusion under subdivision (d)
does not apply.
   (f) Without regard to care or lack of care of either the customer
or the bank, a customer who does not within one year after the
statement or items are made available to the customer (subdivision
(a)) discover and report the customer's unauthorized signature on or
any alteration on the item is precluded from asserting against the
bank the unauthorized signature or alteration. If there is a
preclusion under this subdivision, the payer bank may not recover for
breach of warranty under Section 4208 with respect to the
unauthorized signature or alteration to which the preclusion applies.

   (g) As used in this section, "substitute check" shall have the
same meaning as used in Section 229.2 of Title 12 of the Code of
Federal Regulations.
   (h) This section shall remain in effect only until January 1,
 2010   2015  , and as of that date is
repealed, unless a later enacted statute, which is enacted before
January 1,  2010   2015  , deletes or
extends that date.
  SEC. 2.  Section 4406 of the Commercial Code, as amended by Section
2 of Chapter 41 of the Statutes of 2005, is amended to read:
   4406.  (a) A bank that sends or makes available to a customer a
statement of account showing payment of items for the account shall
either return or make available to the customer the items paid or
provide information in the statement of account sufficient to allow
the customer to identify the items paid. If the bank does not return
the items, it shall provide in the statement of account the telephone
number that the customer may call to request an item, a substitute
check, or a legible copy thereof pursuant to subdivision (b).
   (b) If the items are not returned to the customer, the person
retaining the items shall either retain the items or, if the items
are destroyed, maintain the capacity to furnish legible copies of the
items until the expiration of seven years after receipt of the
items. A customer may request an item from the bank that paid the
item, and that bank shall provide in a reasonable time either the
item or, if the item has been destroyed or is not otherwise
obtainable, a legible copy of the item. If the paid item requested by
a customer was presented as a substitute check, the bank shall
provide, in a reasonable time, either the substitute check or, if the
substitute check has been destroyed or is not otherwise obtainable,
a legible copy of the substitute check. A bank shall provide, upon
request, and without charge to the customer, at least two items,
substitute checks, or legible copies thereof, with respect to each
statement of account sent to the customer.
   (c) If a bank sends or makes available a statement of account or
items pursuant to subdivision (a), the customer shall exercise
reasonable promptness in examining the statement or the items to
determine whether any payment was not authorized because of an
alteration of an item or because a purported signature by or on
behalf of the customer was not authorized. If, based on the statement
or items provided, the customer should reasonably have discovered
the unauthorized payment, the customer shall promptly notify the bank
of the relevant facts.
   (d) If the bank proves that the customer failed, with respect to
an item, to comply with the duties imposed on the customer by
subdivision (c), the customer is precluded from asserting any of the
following against the bank:
   (1) The customer's unauthorized signature or any alteration on the
item if the bank also proves that it suffered a loss by reason of
the failure.
   (2) The customer's unauthorized signature or alteration by the
same wrongdoer on any other item paid in good faith by the bank if
the payment was made before the bank received notice from the
customer of the unauthorized signature or alteration and after the
customer had been afforded a reasonable period of time, not exceeding
30 days, in which to examine the item or statement of account and
notify the bank.
   (e) If subdivision (d) applies and the customer proves that the
bank failed to exercise ordinary care in paying the item and that the
failure contributed to loss, the loss is allocated between the
customer precluded and the bank asserting the preclusion according to
the extent to which the failure of the customer to comply with
subdivision (c) and the failure of the bank to exercise ordinary care
contributed to the loss. If the customer proves that the bank did
not pay the item in good faith, the preclusion under subdivision (d)
does not apply.
   (f) Without regard to care or lack of care of either the customer
or the bank, a customer who does not within one year after the
statement or items are made available to the customer (subdivision
(a)) discover and report the customer's unauthorized signature on or
any alteration on the item is precluded from asserting against the
bank the unauthorized signature or alteration. If there is a
preclusion under this subdivision, the payer bank may not recover for
breach of warranty under Section 4208 with respect to the
unauthorized signature or alteration to which the preclusion applies.

   (g) As used in this section, "substitute check" shall have the
same meaning as used in Section 229.2 of Title 12 of the Code of
Federal Regulations.
   (h) This section shall become operative on January 1, 
2010   2015  .