What is Rule 9?

”Rule 9” is the common industry term for ECCHO Forged and Counterfeit Warranties in which a Depositary bank warrants to the Paying bank that (i) the signature of the purported drawer is not forged or otherwise unauthorized, and (ii) the related physical check is not counterfeit. Rule 9 At-A-Glance

What is the Purpose of Rule 9?

Counterfeit items and items with forged drawers’ signatures are often identified by bank customers after the deadline for returning them has passed.  Rule 9 allows a paying bank to make a claim against a depositary bank to recover for such an item.  The depositary bank is liable only if there are sufficient funds in the depositing customer’s account.  Moreover, the depositary bank can often charge the item back to that customer, so no bank is left with a loss from the fraud.

Who can use Rule 9?

Rule 9 is only available for electronic checks exchanged by ECCHO members who have not opted out of Rule 9.   All ECCHO Member financial institutions and licensed entity participants are automatically subject to Rule 9 although there is an opt out provision. The opt out decision is an individual bank decision that should be made by carefully weighing the risks against the benefits and under the guidance of your legal team. You may view other ECCHO Members’ Rule 9 Status by logging into your ECCHO Online Account.

If you would like information on becoming an ECCHO member, please visit our ECCHO Membership page or send a request for information to ecchoinfo@theclearinghouse.org.