Published: December 2013

Remote checks debit consumer accounts without consent

One way to improve the U.S. Payment System is to ban remotely created checks.

Consumer Action and coaltion advocates urge the Federal Reserve Board to ban the use of remotely created checks (RCCs) and remotely created payment orders (RCPOs) to obtain payments from consumers. RCCs are used by payday lenders (storefront, internet and tribal), internet scammers, and other merchants in high-risk industries such as gambling advice, psychic readings, pyramid sales, terminated merchants, pawnbrokers, bail bondsmen, debt reduction services, and loan modifications.

Canada banned RCCs in 2004. The National Association of Attorneys General has called for their abolition since 2005.  In the last few years, the case for abolishing RCCs has become even more compelling as automated clearinghouse transactions are now available in situations where RCCs were being used, and the evidence of abuses of RCCs has become overwhelming. The time has come to ban RCCs in consumer (and potentially all) transactions. Until a ban can be fully implemented, the FRB should crack down on illegitimate use of this payment instrument in the meantime.

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

Consumer Action | Consumer Federation of America | Center for Responsible Lending | National Association of Consumer Advocates | National Consumers League | U.S. PIRG.

More Information

To download the entire coalition letter, please click here.

For more information, please visit the NCLC website.

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