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what is ucc article 4a

Date : 13-03-2023

UCC Article 4A refers to a section of the Uniform Commercial Code (UCC) that provides rules and regulations for funds transfers between banks. Specifically, it outlines the legal framework for electronic funds transfers (EFTs), such as wire transfers, automated clearinghouse (ACH) transactions, and other forms of electronic payment.

Article 4A was first introduced in 1989 and has since been adopted by most states in the US. Its purpose is to provide a clear set of rules and guidelines for banks to follow when conducting electronic funds transfers. This includes establishing standards for security, error resolution, liability, and other important issues related to funds transfers.

Some of the key provisions of UCC Article 4A include:

  • Banks are required to establish security procedures to ensure that funds transfers are protected from unauthorized access and fraud.
  • If an error occurs during a funds transfer, the bank responsible for the error is liable for any losses incurred by the customer as a result.
  • The customer and the bank must agree on the terms and conditions of the funds transfer before it takes place.
  • Banks are required to provide prompt notice of funds transfers to their customers, including information about the amount of the transfer, the parties involved, and any fees or charges.
  • In the event of a dispute, the bank must investigate and resolve the issue in a timely manner.

Overall, UCC Article 4A helps to ensure that electronic funds transfers are conducted safely, efficiently, and fairly for all parties involved.