Checking Account Terms and Conditions Change | Effective May 1, 2013
The following is a summary of the changes made to the checking account term and conditions effective May 1, 2013:
- Two sentences have been added after the first sentence in the last paragraph of the Agreement section – However, this Agreement does not intend, and the terms “you” and “your” should not be interpreted, to expand an individual’s responsibility for an organization’s liability. If this account is owned by a corporation, partnership or other organization, individual liability is determined by the laws generally applicable to that type of organization. This is intended to address the application of certain provisions in the agreement to individuals signing on business accounts. For instance, the account agreement defines “you” as the accountholder and anyone with authority to deposit or withdraw. But in the Liability section it says each of you are jointly and severably liable for any account shortage. This was never intended to mean that an individual was necessarily responsible for a corporate debt.
- In the Liability section, minor revisions have been made to the text regarding costs and attorneys’ fees. The following has been added – This also includes any action that you or a third party takes regarding the account that causes us, in good faith, to seek the advice of an attorney, whether or not we become involved in the dispute. All costs and attorneys’ fees can be deducted from your account when they are incurred, without notice to you. This has been done to make the text more clear and understandable.
- The optional version of the Withdrawals, Authorized Signer, Deposits, Stop Payments, Amendments and Termination, Facsimile Signatures and Restrictive Legends sections as our standard versions. These more expansive versions of these sections are more clear and understandable, and better conform to plain language principles. These versions also provide additional rules or a more complete explanation of the rules applicable to the account or offer other advantages. For example, the Withdrawals section is formatted into subsections which make it easier to read. The Authorized Signer section provides rules regarding the termination of authority of authorized signer. The Stop Payments section explains that this section applies to checks, but not to other types of transfers such as consumer electronic fund transfers. It explains the expiration period for oral and written stop payments. It explains that the customer will not receive notice of the expiration and it provides that the customer is liable for any costs including attorneys’ fees that the institution might suffer as a result of the stop payment. The Amendments and Termination section better describes the customer’s responsibilities associated with closing an account and it provides an explanation of that “reasonable notice” given by the institution depends upon the circumstances.
- A few minor changes were made to the Check Processing section. The last two sentences have been deleted which discuss the time when funds will be available because that information is more appropriately addresses in the Withdrawals section. Also, several grammatical changes for clarity and plain language purposes were made. Changes have also been made to more clearly state that the institution will only rely on information that is in the MICR line of the check.
- Sections that were previously optional have been added as part of our standard Terms and Conditions. Among those sections are:
• Indorsements – explains the customer’s responsibility for indorsements and makes the customer liable for losses resulting from placing indorsements improperly.
• Legal Actions Affecting Your Account – describes the institution’s options in addressing various actions such as attachment and garnishment, and mitigates liability of the institution.
• Claim of Loss – limits the liability of the institution if there is a loss in the account and provides that if there is a loss in the account the customer must cooperate with law enforcement and the institution and take action to mitigate the loss.
• Resolving Account Disputes – provides that the institution may place a hold on funds in the account if there is an adverse claim to the account and that the institution is not liable for items dishonored because of the hold.
- Also added is the previously optional Security section as part of our standard Terms and Conditions. This section explains actions the customer can take to reduce the risk of theft or fraud and provides that the customer is liable for the loss if the customer is negligent in safeguarding checks (unless the institution is negligent). The section has been revised to provide that if the institution offers fraud prevention services such as positive pay or commercially reasonable security procedures which the customer rejects, the customer is responsible for any loss that could have been prevented by the fraud prevention service.