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FE D ER A L R ESER V E BANK O F NEW Y O R K Fiscal A gen t o f the U nited States r Circular No. 57601 L January 18, 1966 J Handling of Food Stamp Coupons by Commercial Banks To A ll Commercial Banks in the Second Federal Reserve D istrict: Enclosed is a statement dated January 1965 prepared by the U. S. Department of Agriculture, entitled “ Procedures for Commercial Banks in Handling Food Coupons Under the Food Stamp Program.” It supersedes the statement forwarded to you with our Circular No. 5040, dated May 25, 1961. In addition, the instructions set forth in this circular supersede those in Circular No. 5040. The U. S. Department of Agriculture has informed us that effective February 1, 1966, the Erie County Welfare District, which embraces Erie County in New York State, will begin operations under the Food Stamp Program. This will be the first area in the Second Federal Reserve District in which the program will operate. Although the program may not be in force in your area at this time, please retain these instructions for future use in the event that the Department of Agriculture subsequently designates your locality for participation in the program. Food stamp coupons (in denominations of 50 cents and two dollars) deposited with and cancelled by commercial banks as indicated in the enclosure may be forwarded to Federal Reserve Banks and Branches for payment by credit to the reserve account of a member bank or the clearing account of a nonmember clearing bank. This Bank, as fiscal agent of the United States, will receive for payment at its Head Office and Buffalo Branch any such coupons forwarded to it by Second District member and nonmember clearing banks. Banks receiving food stamp coupons should handle such coupons in accordance with the Department of Agriculture’s regulations governing the Food Stamp Program, which are summarized in the enclosure. In particular, we should like to call to your attention the requirement that the first bank of deposit cancel each coupon by indelibly marking “ paid” or “ cancelled” together with the name of the bank or its A B A transit number on the face of the coupon by means of an appropriate stamp. The endorsement stamp of a bank used on checks should not be used. In addition, the following instructions should be observed: (a ) F ood stamp coupons should be separately sorted according to denomination and packaged in units of 100 pieces if volume warrants. They should not be included in deposits o f checks and other cash items. I f sent to the Head Office o f this Bank, they should be directed to the attention o f the Coupon Division, Collection Department. Questions regarding any phase o f the collection procedure should be referred to that Division or to the Buffalo Branch. (b ) In forw arding food stamp coupons for payment, banks are requested to show, on deposit slips accom panying the coupons, the total number and aggregate dollar amount o f each denomination, as well as the dollar total o f the deposit. (c ) Nonmember banks that do not maintain clearing accounts with this Bank should, and member and nonmember clearing banks may, send food stamp coupons to a correspondent bank for presentation to this Bank for payment. Correspondent banks should consolidate their daily deposits into one send ing to this Bank. (d ) Immediate credit will be given for food stamp coupons when received at our Head Office or Buffalo Branch prior to 1 :30 p.m. Necessary adjustments fo r overages or shortages will be made under appropriate advice to the sending bank. (e) Depositing banks should retain customers’ deposit slips and any other pertinent records that would assist in substantiating reimbursement claims against the Departm ent o f A griculture fo r items lost in transit. The right is reserved to withdraw, add to, or amend at any time any of the provisions of this circular. Additional copies of this circular and of the enclosure will be furnished upon request. A lfred H ayes, President. Commercial Banks Procedures for Commercial Banks in Handling Food Coupons Under The Food Stamp Program The Food Stamp Program, in operation since 1961 on a pilot basis, is now operated by the United States Department of Agriculture under the Food Stamp Act of 1964.. Under this program, eligible households will exchange an amount of money representing their normal expenditures for food for an allotment of food coupons of higher monetary value. The coupons will be used to purchase commercial brand food at retail food stores which have been approved to accept coupons by the Agricultural Marketing Ser vice, U. S. Department of Agriculture. Retailers accepting the coupons will be able to redeem them at face value, for account or payment in cash through the facilities of commercial banks, including both members and non-members of the Federal Reserve System. Retailers may also redeem coupons through approved food wholesalers. These wholesalers will sub sequently redeem the coupons 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 two denominations: fifty-cent coupons (orange) and two-dollar coupons (blue). Coupons are an obli gation of the United States within the meaning of 18 U. S. C. 8. The provisions of Title 18 of U. S. Code "Crimes and Criminal Procedure” relative to counterfeiting and alteration of obligations of the United States and the uttering, dealing in, etc., of counterfeit obligations of the United States are applicable to these coupons. Also, the pro visions of Section 14 C, The Food Stamp Act of 1964, relating to the making of false claims against the United States are applicable to trans actions involving these coupons. Under Regulations issued by the Secretary of Agriculture: 1. Authorized retail food stores and wholesale food concerns may pre sent food coupons for redemption to commercial banks for account or for cash. 2. Coupons submitted to banks for redemption by approved retail food stores must be accompanied by a properly executed and signed Form AMS253, Retail Merchant's Food Stamp Program Redemption Certificate (Exhibit A). The back of each coupon must be stamped or otherwise marked with the name or Food Stamp Program Authorization number of the store. Page 1 January 1965 3. Coupons submitted to banks for redemption by approved wholesaler food concerns must be accompanied by a properly executed and signed Form AMS-253-1, Wholesalers’ Food Stamp Program Redemption Certif icate (Exhibit A). Attached thereto must be the properly executed and signed Form AMS-253 for each retail food store from which the wholesaler has accepted food coupons. The back of each coupon must be stamped or otherwise marked with the name or Food Stamp Program Authorization number of both the retail food store and the whole sale food concern. In addition the name or Food Stamp Program Authorization number of each retailer and the value of coupons each certificate represents must be listed on the reverse of the Whole saler’s certificate. 4. Banks shall not accept coupons for redemption from unauthorized re tail 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 Agricultural Marketing Service Food Stamp Program Authori zation, Form AMS-254 (Exhibit A) a. Coupons accepted for redemption must be cancelled by the first bank receiving the coupons by indelibly marking ’’paid" or ’’cancelled" together with the name of the bank or its ABA routing symbol-transit number on the face of the coupons by means of an appropriate stamp. The coupons should not be en dorsed by any bank. b. A portion of a coupon consisting of not less than three-fifths (3/5) of a whole coupon may be accepted for redemption at face value. A portion of a coupon of less than three-fifths (3/5) of a whole coupon will not be accepted for redemption. 5. The Food Stamp Program Redemption Certificates shall be held by the receiving bank until the coupons have been paid by the Federal Re serve Bank, after which the certificates shall be forwarded weekly by the receiving bank to the Agricultural Marketing Service’s local food stamp office. Banks will be notified of the address of this local office by the Agricultural Marketing Service. 6. Banks which are members of the Federal Reserve System and nonmember clearing banks may forward cancelled coupons directly to Federal Reserve Banks for payment in accordance with applicable regulations or instructions of the Federal Reserve Banks. Other banks may for ward cancelled coupons through ordinary collection channels. Page 2 January 1965 7. Banks may forward cancelled coupons via fourth-class mail (parcel post), provided that the Food Stamp Authorization number or the name of the food store or wholesale food concern is stamped on the coupon rather than handwritten out. Under postal regulations, any handwritten entry on any part of a mailed item subjects the entire package to the first class mail rate. Shipments under fourth-class mail may be expedited through the Special Handling procedure of the U. S. Post Office. 8. Banks may wish to reduce sorting and handling costs of coupons by requiring those depositors of substantial numbers of coupons to pre cancel the coupons for the bank and sort them into bundles containing a specific number of coupons (100, for example) prior to making a deposit. This would eliminate all handling of individual coupons by the bank except for any verification count the bank may wish to make. This type of arrangement must be between the bank and the customer on an individual basis. If this procedure is followed, the retailer or wholesaler must cancel the face of the coupon using a stamp that contains: (l) the Food Stamp Program Authorization number of the retail or wholesale concern; (2) the word "PAID" in approximately 3/4 inch high letters, and (3) the ABA routing symboltransit number of the bank. All lettering on the stamp used by the retailer or wholesaler must be in outline or open type, not solid type. The stamp shall not exceed 1-1/2" by 2 ". Banks shall inform the AMS local food stamp office if they intend to use this procedure. 9. Federal Reserve Banks acting as fiscal agents of the United States, are authorized to receive cancelled coupons from member banks of the Federal Reserve System and non-member clearing banks sent in accor dance with instructions to be issued by the Federal Reserve Banks and to pay such coupons. 10. While in the course of shipment, cancelled coupons shall be con sidered to be at the risk of the U. S. Department of Agriculture, if the bank transmitting such coupons has exercised due diligence and taken ordinary care in making the shipment. Reports of loss, destruction or damage shall be given promptly on discovery to all of the following: Agricultural Marketing Service; the nearest Secret Service Office; the Post Office or other carrier; and the Secretary of the Treasury, Bureau of Accounts. Page 3 January 1965 - 4 - EXHIBIT A INSTRUCTIONS TO R E T A IL MERCHANTS: (B) (1) In presenting coupons to bsnks, separate cou pons by denomination. (2) BLOCK A: Show the name and address o f the bank or wholesaler re deeming the coupons. (3) BLOCK B: Show the store’ s name, address, and suthorizstion number snd the date. (4) BLO CK C: Show the value of the ce rtificstion is signed by the store’ s repre sentative snd that his title is given. FORM AMS-253 Name o f store Authorization No. Address Date 1 ( Q TO T A L V A L U E OF COUPONS REDEEMED BANK'S STAMP I (D) C ER TIFICATION This is to certify that the food coupons submitted herewith for redemption were, in accordance with the regulations gov erning the Food Stamp Program, received by the above-named authorized retail food store in exchange for eligible foods. It is further certified that none o f said coupons were knowingly accepted from sny person who had no right to transfer, ex change, or negotiate such coupons under the regulstions. (A) NAME AND ADDRESS O F BANK OR WHOLESALER Actual Size: 8" x 3-1/4” (NAME) By Title (CITY AND STATE) (SIGNATURE OF FIRM'S REPRESENTATIVE) R ETA IL MERCHANT’S FOOD STAMP PROGRAM REDEMPTION C ER TIFIC A TE FORM AMS-253-1 Actual S ire : 8" x 3-1/4" INSTRUCTIONS TO WHOLESALERS: (1) In presenting coupons to bsnks, separate cou pons by denomination. (2) BLOCK Ai Show name sad address o f bank redeeming or crediting cou pons. (3) BLOCK Bt Show firm's name, address, and authorization number and the date. (4) BLOCK Ci Show value o f coupons being redeemed- (5) BLOCK Di Be sure the certificstion is signed by the firm’ s representative and that his title is given. (6) BLOCK E< (On reverse) Furnish names or authorization numbers o f retailers snd value o f cou pons redeemed by each. (7 ) Attach certificates received from retailers. (8) If you also engage in retail business, prepare a separate Retail Mer chant’ s Food Stamp Program Redemption Certif icate (Form AM. .................. from your retail c (A) NAME AND ADDRESS O F BANK Authorization No.. BANK'S STAMP (0) CERTIFICATIO N This is to certify that the food coupons submitted herewith for redemption were, in accordsn ce with the regulstions gov erning the Food Stamp Program, received by the above-named authorized wholesale food concern from authorized retail food stores sccom panied by the sttsched Food Stamp Program Re demption Certificates signed by the food retsilers. It is fur ther certified that none o f ssid coupons were knowingly s c cepted from sny person who had no right to transfer, ezchsnge, or negotiate said coupons under the regulstions. (s i g n a t u r e o r f (CITY AND STATE) i r e p r e s e n t a tiv e ) WHOLESALER’S FOOD STAMP PROGRAM REDEMPTION CER TIFICATE FORM AMS-253-1 (R E V E R S E ) FO R M A M S -25 4 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 A G R I C U L T U R A L M A R K E T IN G S E R V I C E FOOD STAMP PROGRAM AUTHORIZATION THIS CERTIFIES that FORM AMS-254 Actual Six*: 6” x 4“ is granted authorization to accept and redeem food coupons on condition that the accept ance and redemption o f all coupons shall be in accordance with the rules and regula tions governing the Food Stamp Program and such revisions and amendments as may be made. A change in ownership voids this authorization. X n < R e p r e s e n t * ti r e , AM S, V SD A D a te o t A p p r o v e I