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FED ER A L R ESER VE BANK OF NEW YORK March 10, 1970 STOLEN OR DEFECTIVE POSTAL MONEY ORDERS To A ll Banks and Trust Companies in the Second Federal R eserve D istrict: P rinted below is an excerpt from the Federal R egister of Decem ber 6, 1969, containing new ru les adopted by the U.S. Post Office Department providing that the P o stm aster General shall have the right to demand refund from presenting banks on stolen o r defective postal money o rd e rs that they cash. Alfred Hayes, P resident. Title 39— POSTAL SERVICE Chapter I— Post Office Department PART 171— M O N EY ORDERS Paym ents to Banks Through Federal Reserve System In th e daily issue of S aturday, O cto ber 26, 1968 (33 F.R. 15877), th e De p a rtm e n t published a notice of proposed rule m aking consisting of the addition of a new § 171.8 to T itle 39, Code of Fed eral Regulations. T he new section pro posed to give the P ostm aster G eneral th e rig h t to dem and refund from th e p resen t ing bank for the am ount of a paid money order if, a fte r paym ent, th e money order was found to have been stolen, or to b ear a forged or unauthorized endorse m ent, or to contain any m aterial defect or alteratio n w hich was n o t discovered upon in itial exam ination. In addition, it was proposed th a t if refund was n o t m ade by th e presenting bank w ithin 60 days afte r dem and, th e P o stm aster G eneral would be authorized to take such action as necessary to protect the interests of th e U nited S tates. In terested persons were given 30 days w ithin w hich to subm it com m ents on the proposed regulations. A fter consideration of all com m ents received, it has been de term ined to adopt the proposed regula tions w ith the following changes: 1. A definition of a stolen money order is added; 2. T he definition of “E xam ination” of a money order is revised for clarification; 3. T he rig h t to dem and a refund from a bank would have to be exercised w ithin a reasonable period afte r th e facts are discovered. Accordingly, th e following am endm ent to T itle 39, Code of Federal R egulations is hereby made, to be effective on the 30th day afte r th e date of this pub lication in the F e d e r a l R e g i s t e r . In P a rt 171 new § 171.8 is added, read ing as follow s: pleted subject to th e rig h t of th e P o st m aster G eneral to m ake reclam ation as (a) P resentation for paym ent. Banks provided for in p ara g ra p h (e) of this m ay present money orders for paym ent section. (d) Endorsem ents. T he presenting through th e Federal Reserve System. (b) D efinitions. (1) “Money ord er” bank and th e endorser of a money order presented for paym ent are deemed to m eans a U.S. Postal Money Order. (2) “Federal Reserve B ank” m eans a g uaran tee to th e P ostm aster G eneral Federal Reserve B ank or b ran ch thereof th a t all prior endorsem ents are genuine, w hich presents a money order for p ay w hether or n o t an express g u aran tee to th a t effect has been placed on th e money m ent by the P ostm aster G eneral. (3) “P resenting b an k ” m eans a bank order. W hen an endorsem ent has been w hich presents a money order to, and m ade by a person o th er th a n th e payee receives credit th erefo r from a Federal personally, th e presenting bank and th e Reserve Bank. endorser are deemed to g u aran tee to th e (4) “R eclam ation” m eans th e action Postm aster G eneral, in addition to other tak en by the P ostm aster G eneral to ob w arranties, th a t th e person who so en tain refund of the am ounts of paid money dorsed h a d unqualified cap acity an d orders. au th o rity to endorse th e m oney order on (5) “E xam ination” includes exam ina behalf of th e payee. tion of money orders for indicia of theft, (e) R eclam ation. The P o stm aster G en forged endorsem ents, forged signatures eral shall have th e rig h t to dem and re or initials of issuing personnel, raised am ounts, an d other m aterial defects by fund from th e presenting bank of th e m eans of electronic m ethods and also am ount of a paid money o rd er if, afte r visual inspection for discovery of de paym ent, th e money order is found to fects w hich cannot be electronically have been stolen, or to bear a forged or unauthorized endorsem ent, or to co n tain discovered. (6) “Stolen money o rd er” m eans a any m aterial defect or alte ra tio n w hich U.S. Postal Money O rder which has been was n o t discovered upon exam ination. stolen from a post office, classified or Such rig h t includes, but is n o t lim ited to, c o n tra ct statio n or branch or postal em th e rig h t to m ake reclam ation of th e ployee before it has been officially issued am ount by w hich a genuine money order by the post office, classified or co n tract bearing a proper and an authorized e n statio n or branch or by a postal employee dorsem ent has been raised. S uch rig h t in the course of discharging his official shall be exercised w ithin a reasonable duties. tim e a fte r th e P ostm aster G eneral dis (c) P aym ent. The P ostm aster G eneral covers th a t th e money ord er has been has the usual rig h t of a drawee to ex stolen, or bears a forged or u n authorized am ine money orders presented for p ay endorsem ent, or is otherw ise defective. If m ent by banks th ro u g h the Federal R e refu n d is n o t m ade by th e presenting serve System and to refuse paym ent of bank w ithin 60 days afte r dem and, th e money orders and shall have a reasonable P o stm aster G eneral shall ta k e such ac tim e after presentation to m ake such ex tion as m ay be necessary to p rotect the am ination. Provisional credit shall be in terests of th e U nited S tates. given to th e Federal Reserve B ank when (5 U.S.C. 301, 39 U.S.C. 501, 5101) it furnishes th e money orders for p ay D avid A. N e lso n , m ent by the P ostm aster G eneral. Money G eneral Counsel. orders shall be deemed to be paid only [F.R. Doc. 69-14523; Filed, Dec. 5, 1969; afte r exam ination has been fully com 8:47 a.m.] § 1 7 1 .8 P aym en ts lo banks F ederal R eserve System . through
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