(Sec. 3) Defines "substitute check" as a paper reproduction of the original check that: (1) contains an image of the front and back of the original; (2) bears a "MICR line" or "magnetic ink character recognition line" containing all the information appearing on the MICR line of the original check (except as provided under generally applicable industry standards for substitute checks to facilitate the processing of substitute checks); and (3) is suitable for automated processing in the same manner as the original.
Defines check truncation as removal of an original paper check from the check collection or return process and sending in its lieu a substitute check (or, by agreement, information relating to the original check), with or without subsequent delivery of the original paper check.
(Sec. 4) Prescribes implementation guidelines, including: (1) the applicability of Federal and State law and designated provisions of the Code of Federal Regulations and the Uniform Commercial Code; (2) substitute check warranties; (3) indemnity procedures; and (4) expedited recredit procedures for consumers and for claimant banks (including notice requirements for reversal of recredit).
(Sec. 8) Sets forth: (1) procedures for claimant banks against an indemnifying bank for expedited recredit; (2) a measure of damages for breach of warranty or failure to comply with requirements that incorporates a comparative negligence standard; (3) a one-year statute of limitations under which the cause of action accrues as of the date the injured party first learns, or reasonably should have learned, of the facts and circumstances giving rise to the cause of action; and (4) consumer education requirements regarding substitute checks.
(Sec. 15) Instructs the Board of Governors of the Federal Reserve System to study and report to Congress on selected factors that impact funds availability.
(Sec. 16) Instructs the Comptroller General to evaluate and report to Congress on the implementation and administration of this Act.
(Sec. 17) Permits the banks involved to vary by agreement the procedures governing expedited recredit under this Act.