Payments

[...]the final rule creates a regulatory framework for electronic check collection and return.13 It introduces the new defined terms "electronic check" and "electronic returned check," and subjects these new items to the existing papercheck warranties under subpart C to Regulation CC, as well as Check-21-like warranties.14 These warranties ensure that, regardless of whether a check is in paper or electronic form, a bank that receives such an item for collection, presentment, or return receives the same warranties.15 The final rule also introduces indemnities for losses arising from certain risks unique to processing electronic checks. In the suit by the executor of the husband's estate against the depository bank for allowing these alleged unauthorized transfers, the court barred most of the claims on the basis of section 4-406(f); the claims for honoring unauthorized signatures were brought more than one year after TD Bank made statements available to its customer showing the withdrawals and transfers in question.77 The court held this bar applicable even if the bank had notice of the wife's unauthorized transfers and withdrawals at the time they were made or it was otherwise negligent.78 It viewed the one-year requirement as necessary to bring certainty to banking transactions and as an absolute notice prerequisite to bringing suit and not a statute of limitations tolled until discovery, whether for breach of a warranty or other provision of the U.C.C. or for negligence outside the U.C.C.79 Borowski v. J.P. Morgan Chase Bank, N.A.80 involved the unauthorized use of an elderly depositor's debit card and a power of attorney to create unauthorized new signature cards and to add the wrongdoer to the account after which he wrote unauthorized checks, made ATM withdrawals, and initiated wire transfers to deplete the account. The district court rejected that argument and granted the defendant bank's motion to dismiss on the ground that Article 4A generally protects a beneficiary's bank from loss that results if a person other than the intended beneficiary is paid.127 The court focused on section 4A-207(b), which governs errors in the description of the beneficiary in the originator's payment order, and concluded that Article 4A allocates loss to the beneficiary's bank only in limited circumstances, where: (1) the payment order identifies the beneficiary by inconsistent name and identifying number (usually the beneficiary's bank account number); and (2) the benef