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F ederal Reserve Ba nk o f D allas DALLAS, TEXAS 75222 Circular No. 72-199 September 21, 1972 FOOD STAMP PROGRAM To All Banks in the Eleventh Federal Reserve District: The Department of Agriculture and the Federal Reserve Banks have reviewed the procedure for processing food coupons accepted for redemption from commercial banks. In certain instances, revisions have been made to the conditions under which such coupons will be accepted for deposit. Attached is a revised copy of the Department of Agriculture’s Procedures for Commercial Banks in Handling Food Coupons Under the Food Stamp Program dated June 13, 1972. For your guidance in trans mitting food coupons to this Bank and its Branches, please observe the following procedures: 1. Review the coupons to determine that all items in the transmittal have been canceled either by your bank or the first bank of deposit with an indelible stamp reading ’Paid" or "Canceled" together with the ’ name of the bank or its ABA transit number on the face of the coupons. The coupons should not be endorsed by any bank. Please note that only this type of cancellation is acceptable and coupons transmitted without cancellation of this type on the face of the coupon cannot be accepted for redemption. 2. Food coupons that have been redeemed must be sorted separately according to denominations and arranged face and top up in packages of 100 coupons each. Preferably, each package of 100 coupons should be bound with a paper strap on which the name of the depositing bank is shown. It is requested that all banks transmit only full packages of 100 coupons but it is realized that banks with a small volume of coupons will desire to forward all coupons to the Federal Reserve Banks at least once a week. These banks should transmit odd packages of less than 100 coupons per package per denomination no more frequently than once a week, preferably on Wednesdays. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 3. Food coupons forwarded to an office of this bank must be separately packaged from other items and clearly identified "Food Coupons". Special labels will be furnished to the banks that are now depositing items with us. If these labels are not received by your bank by October 1, 1972, please contact the office that serves your bank. Banks are encouraged to use this label to facilitate the identity of the shipments. The continued cooperation of your bank in observing the procedures outlined will be appreciated. If you have any questions regarding this program, they should be addressed to the office serving your bank. Yours very truly, P. E. Coldwell President Enclosure FNS(FS) INSTRUCTION 728-2 EXHIBIT A Procedures for Commercial Banks in Handling Food Coupons Under the Food Stamp Program I GENERAL INFORMATION The Food Stamp Program is operated by the U.S. Department of Agriculture under the Food Stamp Act of 1964, as amended. Under this program, eligible households exchange an amount of money for an allotment of food coupons of higher monetary value. The coupons are used to purchase eligible foods at retail food stores which have been approved to accept coupons by the Food and Nutrition Service, U.S. Department of Agriculture. Approved retailers accepting the coupons may redeem them at face value, for credit to their account or payment in cash, through the facilities of commercial banks, including both members and nonmembers of the Federal Reserve System. Approved retailers may also redeem coupons through approved food wholesalers. These wholesalers subsequently redeem the coupons at the face value, for credit to their account or payment in cash, through the facilities of commercial banks. Coupons are engraved documents about the size of U.S. currency and are printed by the Bureau of Engraving and Printing, U.S. Department of the Treasury. Coupons are printed in three denominations: 50-cent coupons (orange), $2 coupons (blue), and $5 coupons (maroon). Coupons are an obligation of the United States within the meaning of Section 8, Title 18 of the U.S. Code, "Crime and Criminal Procedures." The provisions of Title 18 relative to counterfeiting and alteration of obligations of the United States and the uttering, dealing in, etc., of counterfeit obligations of the United States apply to these coupons. All transactions involving coupons are subject to the provisions of Sections 14b and 14c of the Food Stamp Act which concern the penalties for the unauthorized use of coupons. Any such use may constitute a false claim against the United States. The procedures stated herein set forth the methods to be used by retail food stores and wholesale food concerns in redeeming food coupons, and by commercial banks in accepting them and obtaining payment therefor. II AUTHORIZED RETAIL FOOD STORES AND WHOLESALE FOOD CONCERNS Authorized retail food stores and wholesale food concerns are required to use the following procedures when preparing food coupons for redemption by commercial banks: R 11 ’ r'OOQ f Page 1 6-13-72 FNS(FS) INSTRUCTION 728-2 EXHIBIT A (II) A Retail Food Stores . 1 Stamp or otherwise mark the back of each coupon with the name or Food Stamp Program Authorization Number of the store. An ordinary deposit endorsement stamp may be used if the stamp includes the name or authorization number of the store. 2 Prepare a properly executed and signed Form FNS-278, Food Stamp Redemption Certificate (see Attachment 1 for properly completed sample of Form FNS-278). 3 Submit the Form FNS-278 the commercial bank. B and the endorsed food coupons to Wholesale Food Concerns. 1 Stamp or otherwise mark the back of each coupon with the name or Food Stamp Program Authorization Number of the wholesaler. An ordinary deposit endorsement stamp may be used if the stamp includes the name or Authorization Number of the wholesaler. 2 Prepare a properly executed and signed Form FNS-253-1, Wholesaler's Food Stamp Program Redemption Certificate (see Attachment 2 for a completed sample of this form). 3 List the name £ r Food Stamp Program Authorization Number of each retailer and the value of coupons represented by each retailerTs certificate on the reverse of the Form FNS-253-1, and attach thereto the properly executed and signed Form FNS-278 for each retail food store whose food coupons are included. 4 Submit the Form FNS-253-1 with Form(s) FNS-278 attached and the endorsed food coupons to the commercial bank. Ill COMMERCIAL BANKS Commercial banks shall use the following procedures when accepting and handling food coupons presented for redemption; obtaining payment therefor; shipping to Federal Reserve Banks; reporting of lost, damaged or counter feit cancelled coupons; and reporting of stolen coupons presented for redemption. Page 2 6-13-72 FNS(FS) INSTRUCTION 728-2 EXHIBIT A (III) A Acceptance and Handling Food Coupons Presented for Redemption. 1 Banks shall not knowingly accept coupons for redemption from unauthorized retail food stores, wholesale food concerns, or any other unauthorized persons, partnerships, corporations, or other legal entities. Banks may require persons presenting coupons for redemption to exhibit their Form FNS-254, Food Stamp Program Authorization (see Attachment 3). Any unauthorized person attempting to redeem coupons should be referred to the local Food and Nutrition Service Field Office. The bank should report any such attempt to the same office. 2 The receiving bank shall assure that all coupons accepted for redemption from retailers are accompanied by a properly executed and signed Form FNS-278, Food Stamp Redemption Certificate (see Attachment 1). Coupons accepted for redemption from wholesalers shall be accompanied by a Form FNS-253-1, Wholesaler’s Redemption Certificate, (see Attachment 2) and the completed Form FNS-278. The bank shall then place its stamp, in the space provided, on each Redemption Certificate at the time the coupons are accepted. 3 The first bank receiving the coupons for redemption must cancel them by indelibly stamping "Paid" or "Cancelled" together with the name of the bank or its ABA transit number on the face of the coupons. The coupons should not be endorsed by any bank. 4 Banks may accept a portion of a coupon consisting of at least three-fifths of a whole coupon for redemption at face value. Less than three-fifths of a whole coupon shall not be accepted for redemption. Commercial banks shall return such coupons to the retailer or wholesaler and advise him to contact the local Food and Nutrition Service Field Office. B Obtaining Payment for Redeemed Food Coupons. 1 Federal Reserve Banks acting as fiscal agents of the United States are authorized to receive coupons directly from: a Member banks of the Federal Reserve System. b Nonmember clearing banks. c Nonmember banks which have arranged with a Federal Reserve Bank to deposit coupons for credit to an account of a member bank on the books of the Federal Reserve Bank. Page 3 6-13-72 FNS(FS) INSTRUCTION 728-2 EXHIBIT A (III B) 2 Banks in any of the above categories may forward cancelled coupons directly to Federal Reserve Banks for payment in accordance with applicable regulations of the Board of Governors of the Federal Reserve System and instructions of the Federal Reserve Banks. Other banks may forward cancelled coupons through ordinary collection channels. 3 Disposition of redemption certificates by the receiving banks shall be as follows: a Hold the Food Stamp Program Redemption Certificates received from their depositors until payment is received from the Federal Reserve Bank or correspondent b a n k . b After payment is received, forward the Retail Redemp tion Certificates (Forms FNS-278) to: Food Stamp Control Unit ASCS Commodity Office U.S. Department of Agriculture 6400 France Avenue South Minneapolis, Minnesota 55435 NOTE: Special care must be taken in handling the Retailer Redemption Certificates to avoid folding, spindling, or mutilating them. They must not be stapled or paper clipped together when they are sent to the above address. This care is necessary to allow the use of an optional scanning system in tabulating the certificates. c After payment is received, forward the green Wholesaler Redemption Certificates (Forms FNS-253-1) to the local Food and Nutrition Service Field Office. Retail and Wholesaler Redemption Certificates should not be held for more than 1 w eek after payment is received. 4 Banks may forward cancelled coupons via fourth-class mail (parcel post), provided that the Food Stamp Program Authorization Number or the name of the retail food store or wholesale food concern is stamped on the coupon rather than handwritten. Written or typed transmittal letters may be included with fourth-class coupon shipments provided that their content complies with the Postal Service’s definition of an invoice (Sections 135.522 and 135.61 of the Postal Service Manual). If adding machine tapes are included, an 8-cent stamp must be affixed and the package noted that first-class mail is inside. Page 4 6-13-72 FNS(FS) INSTRUCTION 728-2 EXHIBIT A (III B 4) Shipments under fourth-class mail may be expedited through the special handling procedure of the U.S. Postal Service. C Lost or Damaged Coupon Shipments. 1 The Food and Nutrition Service shall be liable for losses of shipments of cancelled coupons while in transit to Federal Reserve or correspondent banks provided that: a The transmitting bank used due diligence and care in making the shipment, and b The bank is unable to recover the loss from the carrier, and c In the event of a partial loss, there is evidence that such loss was due to the package being damaged or tampered with in transit. 2 When cancelled coupons are lost or damaged while in transit to Federal Reserve or correspondent banks, the commercial bank shall: a Make a prompt written report of the loss or damage to the Post Office or other carrier. b Submit the following documents to the local Food and Nutrition Service Field Office in support of any claims for payment for coupons lost in transit: (1) A copy of the notification of loss to the Post Office or other carrier. If the carrier indicates that the coupon were delivered, a delivery receipt shall also be submitted. (2) A n original statement of facts concerning the loss and the b a n k ’s procedures for making the shipment. This statement shall specify that either all or part of the loss cannot be recovered from the carrier. If a partial recovery has been or will be made, the amount shall be stated. Page 5 6-13-72 FNS(FS) INSTRUCTION 728-2 EXHIBIT A (III C 2 b) (3) A statement from the Federal Reserve or correspon dent bank that the shipment or part of the shipment was not received. In the event of a partial loss, this statement shall specify that the loss may have resulted from the package being damaged or tampered with in transit. (4) All of the original redemption certificates received from the firms which relate to the shipment. (5) A copy of the cash letter which transmitted the shipment. 3 When cancelled coupons for which lost in transit claims have been filed are located in, or returned to, a Federal Reserve Bank or a commercial bank, commercial banks shall promptly report such recoveries to the local Food and Nutrition Service Field Office. After the recovery has been reported to Food and Nutrition Service, the cancelled coupons may be processed through ordinary redemption channels. Food and Nutrition Service will then make any necessary claims adjustments. D Suspected Counterfeit Food Coupons. Report all instances of suspected counterfeit food coupons to the nearest office of the U.S. Secret Service and the local Food and Nutrition Service Field Office. Hold the coupons for examination by the Secret Service. E Stolen Coupons Presented for Redemption. If known stolen coupons are presented for redemption, report all such instances to the local Food and Nutrition Service Field Office. Hold the coupons until advice of disposition is received. IV OPTIONAL PROCEDURES FOR COMMERCIAL BANKS IN ACCEPTING AND HANDLING FOOD COUPONS PRESENTED FOR REDEMPTION Banks and their customers can develop specific deposit procedures that best meet their mutual needs. For example, banks may arrange to have their customers precancel the coupons. Under such an arrangement, the retailer or wholesaler, in lieu of marking or stamping the back of each coupon, shall cancel the face of each coupon using a stamp. The face of the stamp shall not be larger than 1 1/2 inches by 2 inches and shall contain the following: A The Food Stamp Program Authorization Number or the name of the retail store or wholesaler. Page 6 6-13-72 FNS(FS) INSTRUCTION 728-2 EXHIBIT A (IV) BThe word "Paid" in letters approximately 3/4 inch in height. C The ABA number of the bank. In addition, banks may arrange with customers depositing large numbers of coupons to sort them by denomination and into bundles of coupons. However, banks should not prohibit retailers and wholesalers from depositing coupons until they accumulate a specific number of coupons. Page 7 6-13-72 FNS(FS) INSTRUCTION 728-2 EXHIBIT A ATTACHMENT 1 (A) VALUE O F C O U P O N S i 1 i' i i, !3 _i j H \9 O!o T H O L 'c'.| H U N D R E D S FOR USDA USE ONLY AUTH. U. S. ________________ ■ _ NO ( 15-2 1 ) “ °0! 0 “ « o o 0000000 0 d 0 0 l | ' '|D ' 0 0i 0 0 1111111 2 2 |0 2 2 0 02 Q Q TIONS TO h S jj so s0 jjlS & fili! 6j6 j ijfi ; 0 it MI 8:j 8[j I Sy 8'j 8L 3, OF AGRIC ULTU RE. F O O D AND NUTRITI ON S ER VI CE B A N K S TA MP 1. Separate coupons by denomination. 2. Item (A), show value of coupons being redeemed. 3. In the red area, place a single vertical line within boxes which match numbers shown in item (A). ---------*■ 4. Item (C), enter name and address of bank or wholesaler redeeming coupons. 5. Item (D), must be completed by Firm’s RepresentjJjjj^. (B) FIRM NK OR WHOLESALER 3 3 3 3 3 3 3 DOE MARK 4444444 12^->M A IN p k TREaTyN I \ 5 555555 w ^ ngtH ( . I r ' FIRM JOHN * 0j4§ * 4 0 0 j _ COMPLETE THIS FORM WITH A #2 PENCIL INSTRUC 2 22 22 2 2 hO 30|30 3| 3 0 DEPARTMENT FO SAPRDMI N ETI AE OD TM EEP O CRI CT T F 6 6 6 6 6 6 E IR ^S \A U T H NO A ■ " IT Y . STATE §k ZIP CQDEj _ A £ ) t lo o n 9999999 (D) CERTIFICATION OF FIRM 'S REPRESENTATIVE 77 77777 881118 8 O d k .J & u jtt \ dw w This is to c e rtify th a t th e food c o u p o n s s u b m i t t e d h e rew ith for r e d e m p tio n were a cc ep ted in accordance w ith th e Food S t a m p Program R e g u la tio n s. 9 I 9: | a!| 9(1 DO NOT FOLD, SPINDLE OR M U TILATE 6-13-72 F O R M FN S -2 5 3 - 1 ( R E V E R S E ! * NOTE: T his total must agree with tfie total value o f stamps shown in block " C - " FNS(FS) INSTRUCTION 728-2 EXHIBIT A ATTACHMENT 2 FNS(FS) INSTRUCTION 728-2 EXHIBIT A ATTACHMENT 3 U.S. D E P A R T M E N T O F A G R I C U L T U R E FO RM f-N^-254 (2 7 1) FOOD AND N U T R IT IO N S ER VIC E FOOD STAMP PROGRAM AUTHORIZATION T H I S C K R T I F I K S th at Y ^ 6 M & ’V o U J N 1 M a im S + a a e -l-, H oaxcl-Voujn , H T . lo o o O is grunted aut hot k'; j ! ion to ac cep t and redeem food co upons on c o n d itio n that the a c c e p t a n c e and redem ption of a l l coup on s s h a ll be in ac c o r d a n c e w it h the r ules and r e g u la tio n s g o verning the Fo od Stamp Program and such r e v is io n s and am en dm ents as may be made. A U TH O R IZA T IO N NUMBER 0 0 0 3 0 3 -8 DATE A change in o w n c r s h i p , s t o r e n a m e a u t h o r i z a t i o n a n d t h i s c a r d m u s t be r e t u r n e d t o t h e convenn-ntv, the huek of th is OF APPROVAL or l o c a t i o n , or t h e c l o s i n g o f t h e b u s i n e s s card has F ood a nd N u t r it io n S e r v ic e . boon p r e - a d d r e s s e d a n d no p o s t a g e v o id s th is F o r your is r e q u ire d . U.S. DEPARTMENT OF AGRICULTURE FO OD A N D N U T R I T I O N S E R V I C E POSTAGE & FEES PAID United S tates Department of Agriculture O F FIC IA L B U SINESS P E N A L T Y F O R P R I V A T E U S E , * 300 Mr. Gr oce r, P l e a s e c h e c k th e a p p r o p r ia te box or b o x e s s o th a t we may b e t t e r s e r v e you Ca rd is b e i n g re t u r n e d b e c a u s e of: □ C H A N G E IN S T O R E N AME OR L O C A T IO N P H O N E NU MB ER AREA CODE C LO SING OF B U S IN E S S C H A N G E IN OW NERSHIP □ NE W A U T H O R I Z A T ' O N IS R E Q U E S T E D 6-13-72
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