HR9331-119

What This Bill Does

The STOP Payments Fraud Act allows additional delays in access to deposited checks and incoming wire transfers when the receiving bank has reasonable suspicion of fraud. Indicators must support that suspicion and appear in the required notice. Federal Reserve and CFPB rules must prescribe initial holds no longer than ten days and extended holds no longer than 45 days, with possible differences by amount and other criteria. These are regulatory maximums, not automatic holds for every deposit. Certain rules identified as higher-fraud-risk circumstances can apply the new-account framework to existing accounts for up to 60 days per occurrence.

Who Benefits and How

Depository institutions gain time to investigate suspected fraudulent payments, potentially reducing losses for banks and their customers. Treasury may benefit from reduced government-check fraud. The reported text replaces the introduced blanket removal of next-day treatment for qualifying Treasury checks and cashier's, certified, teller's and depository checks with a regulator determination for each class, based on material fraud losses and effects on senders and recipients. Each affirmative determination may last no more than a year and requires a congressional explanation within 60 days.

Who Bears the Burden and How

Consumers waiting for legitimate checks or wires may face delayed bill payments and liquidity costs. Bank compliance officers must document reasons, retain notices and follow the new rules; wire determinations cannot rest on a class of persons or transfers. The wire provision bars causally related overdraft fees when the required written notice was not provided at the delay. Federal Reserve Board and CFPB staff must assess the specified check classes within six months and adopt the identified check-fraud and account/wire rules within one year. Those identified amendments take effect 60 days after rule adoption, not immediately on enactment. GAO must study state safeguards, actual hold practices, investigation times and reform options, reporting within nine months of the implementing rules' effective date. The bill also relaxes the statutory directive to shorten ordinary availability periods as clearing improves.

Key Provisions

• Authorizes reasonable-suspicion fraud exceptions for checks and wire transfers with stated notice requirements.
• Requires rules limiting initial holds to ten days and extended holds to 45 days.
• Permits specified higher-risk-account treatment for up to 60 days per occurrence.
• Limits classwide special-check determinations to one year and requires consideration of fraud losses and customer impacts.
• Requires wire-hold recordkeeping, examination oversight and a conditional overdraft-fee protection.
• Requires joint rulemaking, delayed effectiveness for specified amendments and a GAO study and report.