Image Cash Letter
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Image Cash Letter Service (“ICL”) allows Customer or a third party acting as the Customer’s agent (“Third Party Agent”), to transmit, through Customer’s own methods and devices, an Image Cash Letter file (“ICL file’) to Bank for processing. ICL files consist of images of Eligible Items (as defined herein) and check data. As used herein, “Image(s)” means an electronic reproduction of the front and back of Eligible Items. Check data includes the Magnetic Ink Character Recognition formatting (MICR) information in the format and specifications required by the Universal Companion Document x9.37 or the Universal Companion Document x9.100 Guide or any other mutually agreed format.
Customer agrees to follow all of Bank’s present and future requirements and instructions, including Operational Instructions, related to ICL. All Eligible Items imaged and transmitted to Bank using ICL must be legible and meet Bank’s processing requirements.
Subject to the terms hereof, any ICL files received before the cut-off time reflected in the applicable Operational Instructions will be processed on the day they are received and shall be afforded credit in accordance with the then current funds availability schedules. If for any reason Bank is unable to process an ICL file received before the cut-off, Bank will use commercially reasonable efforts to resolve the next Business Day. Subject to terms hereof, any ICL files received after the cut-off times will be processed on the next Business Day. ICL files will only be processed on Bank Business Days.
The information Customer transmits to Bank must contain a record of all Magnetic Ink Character Recognition (MICR) line information sufficient for Bank to create a substitute check and contain the correct amount of the Eligible Item. In addition, Customer’s transmission of an Eligible Item must meet the technical requirements for an “electronic item” under Regulation J and Federal Reserve Operating Circulars, a “substitute check” under Regulation CC, and an “item” as defined by Article 4 of the Uniform Commercial Code as adopted in the state for Customer’s Account and will be the legal representation of the Eligible Item for all purposes.
If an Image transmitted to Bank does not comply with Bank’s processing requirements, Bank may in its discretion:
- Process the Image as received for payment;
- Correct the Image or its accompanying data and process the corrected Image for payment;
- Process the deposit for payment in another format as permitted by law; or
- Charge back Customer’s Account and return the image and accompanying data to Customer.
Customer’s successful transmission of an Image to Bank for processing will be confirmed by a notice from Bank. Notwithstanding Customer’s receipt such confirmation, all of Customer’s transmissions are subject to Bank’s further verification prior to being accepted for deposit.
Bank can reject any Image Customer transmits to Bank for any reason in Bank’s discretion without liability, even where Bank has provided Customer with a confirmation notice. If Bank rejects Customer’s transmitted Image for deposit, Bank will notify Customer. All accepted deposits will be subject to final payment as well as the terms and conditions for Customer’s Account and this Agreement.
Bank will process any returned Eligible Items in accordance with applicable law and the deposit account agreement governing the Account for which the image is presented.
The ICL service can only be used for Eligible Items, which are items that:
- Are paper items that are defined as checks by Regulation CC;
- Are payable in United States currency;
- Are drawn on a financial institution located in the United States;
- Are properly endorsed (stamped or ink) or virtual endorsed using the software;
- Are payable to Customer, unless such item is properly endorsed;
- Are legible and conform to Bank’s imaging and processing standards; and
- Are dated.
Customer may not image, transmit or otherwise try to use ICL to deposit checks or items that are not Eligible Items. The following items are not Eligible Items:
- Substitute checks or remotely created checks as defined by Regulation CC;
- Items that have already been deposited by or returned to Customer; or
- Items that contain alterations or that Customer suspects, or should suspect, are fraudulent, not authorized, suspicious or not likely to be honored.
Customer warrants to Bank that: (I) it will transmit only Eligible Items to Bank; (II) any Image Customer transmits to the system utilized by Bank to provide ICL is a good and accurate image of the original check; (III) none of the items, including Eligible Items, that have been or will be transmitted to the Bank have been previously submitted or deposited with Bank or anyone else and will not be again unless Bank informs Customer otherwise; (IV) any information Customer transmits to Bank pursuant to this Agreement accurately represents all of the information on the front and back of the original check as of the time the original check was truncated, including without limitation: payment instructions placed on the check by, or as authorized by, the drawer, such as the amount of the check, the payee, and the drawer's signature; information identifying the drawer and the paying bank that is preprinted on the check, including the MICR line; and other information placed on the check prior to the time an Image of the check is captured, such as any required identification written on the front of the check and any endorsements applied to the back of the check; (V) no depository bank, drawee, drawer or endorser receiving presentment or return of, or otherwise being charged for, the substitute check, original check, or a paper or electronic representation of the substitute check or original check will be asked to make a payment based upon a check that it already has paid; (VI) it will not transmit any items for deposit into the same Account that the item is drawn on; (VII) following Bank’s notification to Customer confirming that Bank has received Customer’s transmission, Customer will not negotiate, transfer, deposit or present an Eligible Item, or a duplicate thereof, in any form including as an ACH transfer or as an image, reproduction, substitute check or remotely created check; (VIII) no person will receive a transfer, presentment, or return of, or otherwise be charged for, the electronic Eligible Item, the original Eligible Item, or a paper or electronic representation of the original Eligible Item such that the person will be asked to make payment based on an Eligible Item it already has paid; (IX) it has an Account with Bank in good standing; (X) it will comply with all laws, regulations, terms and conditions related to ICL including the terms of this Agreement and all other agreements related to the Customer’s Account; and (XI) any Image Customer transmits will meet the ANSI standards required by Regulation CC, or other applicable standards established by Bank, the Board of Governors of the Federal Reserve System, and any other applicable regulatory agency, clearing house or association.
Customer expressly disclaims all implied warranties, including without limitation the implied warranties of merchantability and fitness for a particular purpose.
Customer shall be responsible for communication costs, if any, for the transmission of data and/or the retrieval of data in connection with Customer’s utilization of ICL.
Customer agrees to comply with all rules and laws affecting the ICL Service including this Agreement, the Rules Governing Customer’s Deposit Accounts with Bank, the terms and conditions for use of Bank’s Electronic Banking services, the Uniform Commercial Code as adopted in the state for Customer’s Account, Regulations J and CC, and Federal Reserve Operating Circulars. Customer will release, indemnify, and hold the Bank harmless from any liability, loss, injury or damage, including without limitation all incidental and consequential damages, together with all related reasonable costs and expenses, including attorneys fees, resulting directly or indirectly from any breach of the warranties set forth herein and/or from any warranty or indemnity claim brought against the Bank by a third party under 12 CFR 229.52 or 12 CFR 229.53 in connection with an imaged check transmitted to Bank by Customer.
Customer agrees that once an Image has been confirmed by Bank as having been successfully transmitted through the ICL Service, it shall securely store the original check for a commercially reasonable retention period. In general, such retention period should be between 30 and 60 days. During the retention period, Customer agrees to take appropriate security measures to safeguard the original check and related files against security risks. Security risks include, without limitation, the theft or reproduction of the original check or unauthorized use of the information on the check or in the file. Customer shall take appropriate security measures to ensure that only authorized personnel shall have access to the original check, that the information contained on the check shall not be disclosed, and that the original check will not be duplicated, will not be scanned more than once, and will not be re-presented, re-deposited or negotiated in any way. Upon request by Bank, Customer will promptly, but in any event within five (5) business days, provide to Bank a retained original check, or a sufficient copy of the front and back thereof, in order to aid in the clearing and collection process, to resolve claims by third parties, or for Bank’s audit or fraud loss prevention purposes. After the retention period expires, Customer shall destroy the original check by shredding it or by any other commercially reasonable manner. Customer agrees to be responsible to Bank for any losses, costs, expenses, and damages Bank may incur as a result of Customer’s failure to comply with the retention and destruction provisions outlined herein.
Customer agrees to provide such information as requested by Bank in order to qualify Customer for ICL, including without limitation, business activities, risk management processes, geographic location, customer base, and employee policies. If qualified, Customer agrees to provide information and Imaged Items as requested by Bank to facilitate investigations related to unusual transactions or poor quality transmissions or to resolve disputes. Such documents may include copies of Imaged Items or original items, if available.
ICL may at times be unavailable to Customer, either with or without prior notice, due to maintenance, security, factors beyond Bank’s reasonable control or other reasons.
AVAILABILITY of FUNDS
Eligible Items deposited using ICL are not subject to the funds availability requirements of Regulation CC. This will remain true even if Bank provides Customer with Regulation CC disclosures or notices. Following a transmission to Bank, Bank might at its discretion place an extended hold on Customer’s funds. If so, Bank will separately inform Customer of the extended hold and when funds can be expected to be available.
THIRD PARTY AGENT
Customer may appoint, as its limited agent, with respect to the performance of any activities relating to ICL, a Third Party Agent to perform such activities. Customer shall be solely responsible for all actions and obligations of such Third Party Agent as if they were the direct actions and obligations of Customer itself. Customer acknowledges that, among other things, this means that Customer is liable for the Third Party Agent’s breaches of warranties and obligations, including liability for indemnification for such breaches, as if Customer breached such warranties and/or obligations itself. Customer agrees to notify Bank of each Third Party Agent it intends to use and other information that Bank may require about the Third Party Agent. Failure to provide timely notice could result in the rejection of ICL files by Bank. Bank may in its sole discretion choose not to accept ICL files from a Third Party Agent identified by Customer. Notwithstanding any notification of Third Party Agent to Bank, Customer represents and warrants to Bank that it has solely, independently and without reliance upon Bank, made its own appraisal of and investigation into the business, operations, intellectual property and other rights, financial, and other conditions, rights and creditworthiness of any Third Party Agent based upon documentation and other information it has deemed appropriate and made its own decision to enter into a relationship with any Third Party Agent. In any event, Customer's agreement with Third Party Agent must include a provision allowing Bank to conduct, upon reasonable notice and during normal business hours, an on-site inspection of Third Party Agent's premises in order to ensure compliance with this section. Customer also represents and warrants to Bank that it will, independently and without reliance upon Bank, continue to make its own analysis, appraisals and decisions with regard to any relationship with a Third Party Agent as it deems appropriate. Customer gives Bank the right to communicate with the Third Party Agent in connection with ICL and to treat Third Party Agent instructions as if the instructions were directly from Customer. Any software necessary for use of ICL by the Third Party Agent must be maintained by the Third Party Agent, and must meet technical specifications acceptable to Bank, as described herein. Customer warrants to Bank that any Third Party Agent is familiar with, and shall at all times be in compliance with the terms hereof, including without limitation, image quality, prohibition of duplicate items, and proper storage and destruction of original checks.
Bank may at its reasonable discretion conduct an on-site inspection of Customer’s place of business and/or request any internal audits or assessments to ensure compliance with the provisions hereof.
In addition to any other indemnification herein, Customer will indemnify and hold Bank harmless from any liability, loss, injury or damage, including without limitation all incidental and consequential damages, together with all related reasonable out-of-pocket costs and expenses, including legal fees, resulting directly or indirectly from: (1) any breach of warranty or other breach, or failure to perform under the terms hereof, (2) any warranty or indemnity claim brought against the Bank by a third party under 12 CFR 229.52, 12 CFR 229.53 or other regulations in connection with an ICL file transmitted to Bank by Customer; (3) any loss by any recipient of an Imaged Item processed by Bank, if that loss occurred due to the receipt of an Imaged Item instead of the check; (4) any wrongful acts or omissions of Customer, or any person acting on Customer’s behalf (including without limitation Customer’s authorized processor, if any), in connection with Customer’s use or misuse of ICL; and (5) without limiting Customer’s other indemnification obligations, which shall apply equally to actions taken by the Third Party Agent, all Third Party Agent’s actions or inactions relating to ICL, including those related to intellectual property claims. These indemnification obligations shall survive the termination of ICL.
Notwithstanding anything contained in this Agreement to the contrary, Bank may terminate the ICL at any time. Bank will try to provide reasonable notice and in any event will provide notice as required by applicable law.