HB5152 93RD GENERAL ASSEMBLY

LRB093 16011 SAS 41635 b

93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB5152

Introduced 02/05/04, by Karen May

SYNOPSIS AS INTRODUCED:

810 ILCS 5/4-402

from Ch. 26, par. 4-402

Amends the Uniform Commercial Code. Provides that a payor bank may not impose a charge or fee more than once for each check returned due to insufficiency of available funds. Provides that a payor bank may impose a charge or fee only once per day regardless of the number of transactions resulting in insufficiency of available funds. Provides that a payor bank must process checks drawn against an account in a manner that is based upon debiting the smallest checks first each day. Provides that a bank wrongfully dishonors an item if it dishonors a check solely because it did not process checks in this manner.

A BILL FOR

AN ACT concerning financial regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Uniform Commercial Code is amended by changing Section 4-402 as follows:

(810 ILCS 5/4-402) (from Ch. 26, par. 4-402)

Sec. 4-402. Bank's liability to customer for wrongful dishonor; time of determining insufficiency of account.

(a) Except as otherwise provided in this Article, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it had agreed to pay the overdraft.

(b) A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. Liability is limited to actual damages proved and may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.

(c) A payor bank's determination of the customer's account balance on which a decision to dishonor for insufficiency of available funds is based may be made at any time between the time the item is received by the payor bank and the time that the payor bank returns the item or gives notice in lieu of return, and no more than one determination need be made. If, at the election of the payor bank, a subsequent balance determination is made for the purpose of reevaluating the bank's decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful. No charge or fee may be imposed more than once for each check returned due to insufficiency of available funds. A charge or fee may be imposed only once per day regardless of the number of transactions resulting in insufficiency of available funds.

(d) A payor bank must process checks drawn against an account in a manner that is based upon debiting the smallest checks first each day. A bank wrongfully dishonors an item if it dishonors a check solely because it did not process checks in this manner.

(Source: P.A. 87-582; 87-1135.)