BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1566|
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CONSENT
Bill No: AB 1566
Author: Assembly Banking and Finance Committee
Amended: As introduced
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMMITTEE : 11-0, 6/17/09
AYES: Calderon, Cogdill, Correa, Cox, Harman, Kehoe, Liu,
Lowenthal, Padilla, Runner, Wolk
NO VOTE RECORDED: Florez
ASSEMBLY FLOOR : 77-0, 4/27/09 (Consent) - See last page
for vote
SUBJECT : Banking: disclosures
SOURCE : California Bankers Association
DIGEST : This bill extends the sunset date on a provision
of law which describes the information a depository
institution is required to provide a customer, in lieu of a
cancelled check, to allow that customer to reasonably
identify the items paid from that customer's account.
ANALYSIS : Existing federal law establishes various laws
governing checks, including the Federal Reserve Act of
1913, which created a national check collection
infrastructure and related rules; the Uniform Commercial
Code, which establishes a uniform set of state laws
governing commercial transactions; the Expedited Funds
Availability Act of 1987, which sets limits on the length
CONTINUED
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of time that banks can withhold access to money deposited
by check; and the Check 21 Act, which created a legal
framework for truncated and substitute checks.
Existing law:
1. Defines a "bank" for purposes of the provisions of the
Commercial Code relating to bank deposits and
collections as a person engaged in the business of
banking, including a savings bank, savings and loan
association, credit union, or trust company.
2. Until January 1, 2010, requires a bank, which sends an
account statement to a customer or otherwise makes that
statement available to the customer, to either return or
make available to the customer the items paid from the
account, or provide information in the statement
sufficient to allow the customer to reasonably identify
the items paid. The word "reasonably" is deleted from
this provision, as of January 1, 2010.
3. Until January 1, 2010, clarifies that the account
statement provides sufficient information to satisfy the
conditions in Number 1 above, if the item is described
by item number, amount, and date of payment (this
provision is deleted, as of January 1, 2010).
4. States that, if a bank does not return items to the
customer, it must provide in its account statement a
telephone number that the customer may call to request
an item, a substitute check, or a legible copy of an
item of substitute check. Banks must retain either the
items or the capacity to furnish legible copies of the
items for at least seven years after receiving the
items, and must provide at least two items, or copies of
those items, to a customer, upon request, and without
charge, for each account statement sent to a customer.
5. Requires customers to exercise reasonable promptness in
examining their statements, to determine whether any
payment was not authorized, and requires customers to
promptly notify the bank of the relevant facts, upon a
discovery that one or more items listed in the
customer's account statement was unauthorized. Gives
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customers up to one year in which to assert a claim,
before they lose the right to recover losses resulting
from payment of the unauthorized items, as specified.
6. Describes the extent to which customers are entitled to
reimbursement for losses incurred as a result of the
unauthorized payment of items from the customer's
account, based on the length of time a customer takes to
notify a bank, the extent to which the bank exercised
ordinary care in paying the item, and the extent to
which the bank failed to pay the item in good faith, as
specified.
This bill extends the sunset date on Existing Law Numbers 2
and 3, above, by five years, to January 1, 2015.
Comments
Purpose of the bill . To extend the sunset date on a
provision of law that specifies what information about a
check must be provided on a customer's bank statement, in
order to allow the customer to reasonably identify the
item(s) paid from his or her account, and, in doing so,
allow the customer to determine whether payments made
against his or her account were authorized.
The provision of law whose sunset date is being extended
was added to the codes in 1992. Its sunset date has been
periodically extended since that time. The inclusion of a
sunset, and the periodic extension of that sunset, was
intended to keep the policy discussion open, regarding
exactly what information customers should receive about
paid checks on their bank statements. Consumers Union (CU)
has historically believed, and continues to believe, that
customers should receive more information about paid items
than is required under Section 4406. However, because the
technology necessary to generate that information has not
been readily available, the California Bankers Association
and CU have previously agreed to defer the discussion, by
extending the sunset date.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
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ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava,
Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Price, Ruskin, Salas, Silva, Skinner,
Smyth, Solorio, Audra Strickland, Swanson, Torlakson,
Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Harkey, Hayashi, Saldana
JJA:do 6/18/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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