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Telemarketer Account
Question: A telemarketer wants to open up a deposit account with our bank. He will be depositing paper drafts into it. Any recommendations for this relationship?
Answer: First, absolutely be sure that you have performed adequate due diligence on this customer. Reg CC was amended to put the burden of warranties of authorization on YOUR bank--not on the payor's bank. Thus, if these remotely created drafts are returned as unauthorized, you will have to reimburse and charge back. Make sure you have good data on the expected volume of activity and then monitor it. Consider requiring this customer to maintain a reserve for returns or collateral for this "credit" risk that you are undertaking.
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