Full text of Federal Reserve Bank of New York Circulars : 6551. Handling of Food Stamp Coupons by Commercial Banks

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F E D E R A L R E S E R V E BANK
O F NEW YO RK
Fiscal Agent of the United States
rCircular No. 6 5 5 IT
L May 29, 1970
J

Handling of Food Stamp Coupons by Commercial Banks

To All Commercial Banks in the
Second Federal Reserve D istrict:

Enclosed is a statem ent prepared by the U. S. D epartm ent of A griculture, entitled
“ Procedures for Commercial Banks in H andling Food Coupons U nder the Food Stamp
P ro g ra m .” I t supersedes the statem ent forw arded to you with our C ircular No. 5760, dated
Ja n u a ry 18, 1966. In addition, the instructions set forth in this circular supersede those in
Circular No. 5760, and supplem ent the provisions of A ppendix C, entitled “ Food Stamp
Coupons,” to our O perating Circular No. 4, Revised effective Septem ber 2, 1969.
The U. S. D epartm ent of A griculture has inform ed us th at beginning June 1, 1970 the Food
Stam p P rogram will be expanded in the Second F ederal Reserve D istrict to include, by the end
of the calendar year, the five counties of New York City and all of the other counties in New
York State th a t are not now participating in the program . I t is estim ated th a t the volume of
redeemed food stam p coupons deposited w ith our H ead Office and our Buffalo Branch will
increase from about 4.7 million a month at the present time to 14.5 million a month by the
end of 1970. Because of this expected expansion in the program , the verification of deposits
and the disposal of redeemed food stam p coupons will be centered at our Buffalo Branch
commencing June 1, 1970. This change will not affect existing instructions w ith respect to
forw arding deposits of food stam p coupons to our H ead Office or Buffalo B ranch for pay­
ment. I t may, however, result in a delay in notifying depositing banks of adjustm ents for
overages and shortages found by our Buffalo B ranch in the verification of deposits.
Food stam p coupons (in denominations of 50 cents and two dollars) deposited with and
cancelled by commercial banks as indicated in the enclosure may be forw arded to F ederal
Reserve Banks and Branches for payment. This Bank, as fiscal agent of the U nited States,
will receive at its H ead Office and Buffalo Branch any such coupons forw arded to it by
Second D istrict member and nonmember clearing banks for credit to th eir accounts. Each
nonmember bank th a t desires to deposit food stam p coupons directly with this Bank, rath er
than with a correspondent member bank, should notify us by letter of its arrangem ent with
the member bank to whose account credit is to be given. In addition, the correspondent
member bank should also indicate by letter to us its willingness to accept such credit, as
well as any resultant debit or credit adjustm ent entries.
Banks receiving food stam p coupons should handle such coupons in accordance with the
D epartm ent of A g riculture’s procedures^ set fo rth in the enclosure. In particular, we should
like to call to your attention the requirem ent th at the first bank of deposit cancel each
coupon by indelibly m arking “ p a id ” or “ cancelled,” together with the name of the bank
or its ABA tra n sit number, on the face of the coupon by means of an appropriate stam p, or
arrange to have its customers cancel such coupons as provided in section I I I on page 5
of the enclosure. The endorsement stam p of a bank used on checks should not be used for
cancelling food stam p coupons. In addition, the following instructions should be observed:




( over)

(a ) Redeem ed food stam p coupons should be separately sorted according to denom ination and
arranged, face and top up, in packages of 100 coupons each (u n d er no circumstances should denom ina­
tions b e m ixed). Coupons should b e retained until 100 have been accum ulated, to com plete the
required package total. E ach package of 100 coupons should be bound w ith a paper strap and the nam e
of th e depositing bank, together w ith the nam e and address of the office of th a t bank a t w hich the
package was prepared, should be indicated thereon. If volume warrants, packages of food stam p
coupons should b e arranged, according to denom ination, in bundles consisting of 10 packages (u n d er
no circum stances should packages of different denom inations be m ixed in a b u n d le). E ach bundle
of 10 packages should be well secured, preferably by cord or heavy rubber bands, or by a strong
p aper w rapper (such as kraft stock). Pins, clips, or staples should not be used to bind packages
or bundles, nor should the packages or bundles be included in deposits of checks and other cash items.
( b ) In forw arding redeem ed food stam p coupons to the H ead Office for paym ent, banks are
requested to use our deposit ticket (F orm C 71). Banks depositing redeem ed food stam p coupons
w ith our Buffalo Branch m ay continue to use the Branch transm ittal letter for food stamps (F orm
B Mon. 2) until th e supply of th at form is exhausted. These deposit tickets provide space for showing
th e total num ber and total dollar am ount of each denomination, as well as the dollar total of the
deposit. T he last copy of the deposit ticket should be retained by the depositing bank. W e will
furnish a supply of deposit tickets upon request. W hen available, w e will also provide a supply of
special envelopes for enclosing the deposit ticket w hen m aking a deposit. T he envelope w ith the
deposit ticket enclosed should b e affixed to the outside of the package or bundle containing the re­
deem ed stam ps or, if a canvas bag is used for shipment, tied to the neck of the bag. T he envelope
containing the deposit ticket should never be enclosed w ithin the outer w rapper or container for the
coupons.
(c ) A bank th a t has more than one office in a city should consolidate the coupons received at all
its offices w ithin the city before depositing the coupons w ith this Bank.
(d ) R edeem ed food stam p coupons should be forw arded to the office of this Bank th at m aintains
th e reserve account or nonm em ber clearing account to w hich the proceeds of the coupons are to be
credited. However, any bank in our H ead Office territory m ay send its redeem ed food stam p coupons
to our Buffalo Branch if by doing so it can save tim e or expense, provided prior notice is given to both
of our offices. Im m ediate credit will be given for redeem ed food stam p coupons w hen received at our
H ead Office prior to 1:30 p.m. or at our Buffalo Branch prior to 2:30 p.m. Necessary adjustm ents for
overages or shortages will be m ade under appropriate advice to the sending bank.
(e ) Depositing banks should retain custom ers’ deposit slips and any other pertinent records that
w ould assist in substantiating reim bursem ent claims against the D epartm ent of Agriculture for items
lost in transit.

I t is im portant th a t this circular and its enclosure be brought to the attention of the
officer or officers a t each bank and its branches, if any, who are or may be in charge of the
food stam p operation. Questions regarding any of the foregoing should be directed to the
Coupon Division a t the H ead Office or the Food Stam p Section at the Buffalo Branch.
The right is reserved to w ithdraw, add to, or amend at any time any of the provisions
of this circular.
A dditional copies of this circular and its enclosure will be furnished upon request.




A

lfred

H

a yes,

President.

Commercial Banks
Procedures for Commercial Banks in Handling Food Coupons Under
The Food Stamp Program

I

BACKGROUND INFORMATION

The Food Stamp Program is operated by the United States Department of
Agriculture under the Food Stamp Act of 1964. Under this program, eli­
gible 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 Consumer and Marketing Service (C&MS), U. S. Department of Agri­
culture.
Approved 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. Approved retailers may also redeem coupons through
approved food wholesalers. These wholesalers will subsequently 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 obligation 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 provisions of Section
14 C, The Food Stamp Act of 1964, relating to the making of false claims
against the United States are applicable to transactions involving these
coupons.
II

PROCEDURES

The procedures embodied herein are divided into four sections. Section
"A" covers the steps to be taken by authorized retail food stores and
wholesale food concerns in the preparation of food coupons for redemption.
Section "B" covers the procedures of commercial banks in accepting and
handling these coupons. Section "C” covers the procedures to be followed




Page 1

(II)

by commercial banks in obtaining payment for food coupons. Section ”D”
covers the procedures to be followed by commercial banks in cases where
coupons are lost or damaged in transit, and where the counterfeiting of
coupons is suspected.
A
Preparation by authorized retail food stores and wholesale
food concerns of food coupons presented for redemption:
1
Authorized retail food stores and wholesale food con­
cerns may present food coupons for redemption to commercial banks for
account or for cash.
2

Retail food stores, when submitting coupons for redemp­

tion, must:
a
Submit with the coupons a properly executed and
signed Form C&MS-253, "Retail Merchant’s Food Stamp Program Redemption
Certificate” (Exhibit A shows a properly completed sample of this Form).
b
Stamp or otherwise mark the back of each coupon
with the name or Food Stamp Program Authorization Number of the store.
Retailers may use an ordinary deposit endorsement stamp if the stamp
includes the name or Food Stamp Program Authorization Number of the store.
3
Wholesale food concerns, when submitting food coupons
for redemption, must:
a
Submit with the coupons a properly executed and
signed Form C&MS-253-1, "Wholesalers' Food Stamp Program Redemption Cer­
tificate” (Exhibit A shows a properly completed sample of this Form).
b
Attach thereto (Form C&MS-253-1) the properly
signed and executed Form C&MS-253 for each retail food store whose food
coupons are included.
c
Stamp or otherwise mark the back of
with the name or Food Stamp Program Authorization Number of
saler. Wholesalers may use an ordinary deposit endorsement
stamp includes the name or Food Stamp Program Authorization
the wholesaler.

each coupon
the whole­
stamp if the
Number of

d
List on the reverse of C&MS-253-1 (Exhibit A)
the name or Authorization Number of each retailer and the value of cou­
pons represented by each retailer’s certificate.

Page 2




(II A 3 d)

B
Procedures of commercial banks in accepting 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 C&MS Food Stamp Program Authorization, Form C&MS-254
(Exhibit A). Any unauthorized person attempting to redeem coupons should
be referred to the nearest Consumer Food Programs (CFP) field office of
C&MS, The bank should report any such attempt to the same office.
2
Coupons accepted for redemption must be accompanied by
a properly executed and signed "Redemption Certificate,'' Form C&MS-253
(Exhibit A) , from retail merchants and Form C&MS-253-1 (Exhibit A) from
wholesalers. The receiving bank shall place its stamp, in the space pro­
vided, on each Redemption Certificate at the time the coupons are accepted.
3
Coupons accepted for redemption must be cancelled by
the first bank receiving the coupons by indelibly marking "paid" or "can­
celled" together with the name of the bank or its ABA transit number
on the face of the coupons by means of an appropriate stamp. The coupons
should not be endorsed by any bank.
4
A portion of a coupon consisting of not less than threefifths (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.
C
Procedures to be followed by commercial banks in obtaining
payment for 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

Non-member clearing banks.

c
Non-member 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.
2
Banks in any of the above categories may forward can­
celled coupons directly to Federal Reserve Banks for payment in accor-




Page 3

(II C 2)

dance 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.

banks.

3
Each bank shall:

Disposition of Redemption Certificates by the receivin

a
Hold the Food Stamp Program Redemption Certificates
received from their 'depositors until payment is received from the Federal
Reserve Bank.
b
Forward the Redemption Certificates, after payment
is received from the Federal Reserve Bank, to the local Consumer Food
Programs (CFP) field office of C&MS. The certificate should not be held
for more than one week after payment is received.
The address of the local CFP field office serving
your area is:

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. Under postal regu­
lations, any handwritten entry on any part of a mailed item subjects
the entire package to the first-class mail rate. Shipments under fourthclass mail may be expedited through the Special Handling procedure of
the U. S. Post Office.
D
Procedures to be followed by commercial banks in cases where
coupons are lost, damaged in transit or suspected to be counterfeit:
Page 4




(II D)

1
While in the course of shipment, cancelled coupons shall
be considered 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:
The local field office of the Consumer and Marketing Service (see address
under # 1 1 C 3 b); the nearest Secret Service Office; the Post Office or
other carrier; and the Secretary of the Treasury, Bureau of Accounts.
2
Claims made by banks for loss of or damage to coupons
while in transit must be supported by the following:
a
Statement of facts concerning the loss and the
bank’s procedures for handling and shipping the cancelled coupons.
b
Original Redemption Certificates with which the
lost or damaged coupons were received by the bank.
c
fied in Item 1 above.
d

Copies of required notices to the agencies speci­

Copy of Cash Letter transmitting the coupon^.

e
Statement from Federal Reserve Bank or other
receiving bank that coupons were not received or were damaged.

6
Instances of suspected counterfeit coupons should be
promptly reported to the nearest office of the U. S. Secret Service.
Ill

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 with
customers to sort coupons by denomination and into bundles containing a
specific number of coupons before making a deposit.
In addition, banks may arrange to have their customers pre-cancel the
coupons. Under such an arrangement, the retailer or wholesaler, in lieu
of marking or stamping the back of each coupon, would cancel the face of
each coupon using a stamp that contains:
A
The Food Stamp Program Authorization Number or the name of
the retail store or wholesaler.




Page 5

(Ill A)

B
The wo r d
of an inch high.
C

"Paid" in letters a p p r o x i m a t e l y t h r e e-fourths

(3/4)

The A B A transit nu m b e r of the bank.

The face of the stamp should not be larger than 1 1/2 inches b y 2 inches.
T h e above examples illustrate pro c e d u r e s that banks and their customers
c a n d e velop to r e d u c e the sorting and h a n d l i n g of coupons pre s e n t e d for
redemption.:

Page 6




EXHIBIT A

INSTRUCTIONS TO RETAIL MERCHANTS;
(1) In presenting coupons to banks, separate cou­
pons by denomination. (2) BLOCK A: Show the
name and address of the bank or w holesaler re­
deeming the coupons. (3) BLOCK B: Show the
store’s name, a d d ress, and authorization number
and the date. (4) BLOCK C: Show the value of
coupons being redeemed. (5) BLOCK D: Be sure
the c ertification is signed by the sto re’s repre­
sentative and that h is title is given.

FORM CFP-253
Actual S iie : 8” x 3-1/4”

HOMtTOW#(NAME)
SdlVA/frS

.(...renoMcrpwAf MARKer
tZ3 MAlV

11- I - 1»7

s Z 6 5 '. 5 'g |

BA N K ’ S STAMP

(D) CERTIFICATION
T his 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 of said coupons were knowingly
accepted from any person who had no right to transfer, ex­
change, or negotiate such coupons under the regulations.

t£ M A lA(STREET
L &SttDNO.)
TK *aT
h o m b t v v j a /;

(CITY AND STATE'

h-e

i REPRESENTATIV

RETAIL MERCHANT'S FOOD STAMP PROGRAM REDEMPTION C ERTIFIC A TE

Jorrici :IMl0-71

FORM C F P -2 5 3 -1
Actual Size: 8" x 3»1/4M

INSTRUCTIONS TO WHOLISALIRS.
(1) In presenting coupons to banks, separate coi
pons by denomination. (2) BLOCK At Show nan
and address of bank redeeming or crediting cm
pons. (3) BLOCK B< Show firm’s name, addres;
and authorisation number and the date. (4) BLOC
Ci Show value of coupons bein^ redeemed. L .
BLOCK Di Be sure the certification is signed by
the film’s representative and th at his title is given.
(4) BLOCK Et (O r reverse; Furnish names or
suthorization numbers of retailers and value of cou­
pons redeemed by each. (7) Attach certificates
received from retailers- (1) If you also engage in
retail business, prepare a separate Retail Mer­
c hant’s Food Stamp Program Redemption C ertif­
ic ate (Form CFP-253) for a ll coupons redeemed
from your retail outlet.
(A) NAME AND ADDRESS OF BANK

8£~ M A /V STR6GT
Uo m £tou) aj7 H r

Authorisation No

d
I (C) TOTAL VALUE OF

... U- I-*7________
BA N K 'S STAMP

■ » S 7Z.STQ

(D) CERTIFICATION
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 w holesale food concern from authorized retail food
stores accompanied by the attached Food Stamp Program Re­
demption C e rtificates signed by the food reta ile rs. It is fur­
ther certified that none of said coupons were knowingly a c ­
cepted from any person who had no right to transfer, exchange,
or negotiate said coupons under the regulations.

By

T itle
(SIGyrfryPE OF PIRM’S REPRESENTATIVE)

TfeSrt£U*6«-

WHOLESALER'S FOOD STAMP PROGRAM REDEMPTION C ERTIFIC A TE

FORM C FP -2 5 3 -1
(R E V E R S E )

FOOD STAMP PROGRAM
FORM CFP-254

THIS C E R T IFIE S th at

Actual S iie : 6” x 4”




I2 S

AUTHORIZATION
HoMfcTTDHJAJ__ M A *K *T

MA iat S T iecg r

H qaastpuj*!. HT.

is g ranted au th o rizatio n to a c ce p t and redeem food coupons on condition th at the a c c e p t­
an ce and redem ption of all coupons sh a ll be in a c co rd ance w ith th e ru le s and reg u la ­
tio n s governing the Food Stamp Program and such re v isio n s and am endm ents a s may
be made. A change in ow nership v o id s th is authorization.

E PR ES E N T A TI VE, CAMS, USDA

//- /- 47
DATE OF A PPR O V A L