[Federal Register Volume 61, Number 52 (Friday, March 15, 1996)]
[Notices]
[Pages 10765-10766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6188]
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FEDERAL RESERVE SYSTEM
Agency Information Collection Activities: Submission to OMB Under
Delegated Authority
Background
Notice is hereby given of the final approval of a proposed
information collection by the Board of Governors of the Federal Reserve
System (Board) under OMB delegated authority, as per 5 C.F.R. 1320.16
(OMB Regulations on Controlling Paperwork Burdens on the Public). The
Federal Reserve may not conduct or sponsor, and the respondent is not
required to respond to, an information collection that has been
extended, revised, or implemented on or after October 1, 1995, unless
it displays a currently valid OMB control number.
FOR FURTHER INFORMATION CONTACT:
Federal Reserve Board Clearance Officer--Mary M. McLaughlin--Division
of Research and Statistics, Board of Governors of the Federal Reserve
System, Washington, DC 20551 (202-452-3829)
OMB Desk Officer--Milo Sunderhauf--Office of Information and Regulatory
Affairs, Office of Management and Budget, New Executive Office
Building, Room 3208, Washington, DC 20503 (202-395-7340)
I. Final approval under OMB delegated authority of the
implementation of the following report:
Report title: Federal Reserve Check Fraud Survey.
Agency form number: FR 3080.
OMB Control number: 7100-0279.
Frequency: One-time.
Reporters: Commercial banks, savings associations, and credit
unions.
Annual reporting hours: 14,976.
Estimated average hours per response: 9.
Number of respondents: 1,664.
Small businesses are not affected.
General description of report: This information collection is
voluntary [Publ. L. 103-325, Title III, section 333] and is
confidential [5 U.S.C. section 552(b)(4)].
Abstract: The Board has approved conducting a one-time, voluntary
check-fraud survey in March 1996. The responses to the survey will be
used by the Board in fulfilling the Congressional mandate to determine
whether there is a pattern of significant increases in losses related
to check fraud at depository institutions attributable to the
provisions of the Expedited Funds Availability Act (EFAA); to consider
whether an extension by one day of the period between the deposit of a
local check and the availability of funds for withdrawal would be
effective in reducing the volume of losses related to check fraud; and
to make recommendations for legislative actions.
II. Justification
The 1994 Community Development Banking Act states that the Board
shall ``conduct a study on the advisability of extending the 1-
business-day period specified in section 603(b)(1) of the Expedited
Funds Availability Act (EFAA), regarding availability of funds
deposited by local checks, to 2 business days.'' The report is to be
submitted to the Congress by September 23, 1996. The Congress further
directed the Board to:
Consider whether there is a pattern of significant
increases in losses related to check fraud at depository institutions
attributable to the provisions of the EFAA;
Consider whether an extension by one day of the period
between the deposit of a local check and the availability of funds for
withdrawal would be effective in reducing the volume of losses related
to check fraud; and
Make recommendations for legislative action.
On December 20, 1995, the Board requested public comment on a
proposed check-fraud survey. The survey is intended to obtain data on
the number of cases of check fraud and the amount of losses incurred by
depository institutions attributed to check fraud.
III. Analysis of Comments
The Board received 45 comment letters on the proposed survey. The
following table identifies the number of commenters by type of
organization:
Commercial Banking Organizations \1\............................ 28
Credit Unions................................................... 8
[[Page 10766]]
Savings Banks................................................... 2
Federal Reserve Banks........................................... 2
Clearing Houses................................................. 1
Trade Associations.............................................. 1
Other \2\....................................................... 3
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Total Commenters............................................ 45
\1\ Banks, bank holding companies, and operating subsidiaries of banks
or bank holding companies.
\2\ Law firms and consumer research groups.
Thirty-three commenters supported the Board's conducting the check-
fraud survey. Seven of those commenters also indicated that the EFAA
availability schedules should be lengthened. Eight commenters did not
address whether the Board should conduct the check fraud survey. Five
of those commenters, however, supported an extension of the EFAA
schedules, while three commenters indicated that no changes should be
made to the EFAA. Two commenters questioned the methodology of the
survey and indicated that they do not support any changes to the EFAA.
Two commenters stated that the survey should not be conducted because
they experienced no losses related to check fraud or the EFAA
schedules.
Five commenters addressed the issue of the estimated burden to
depository institutions of completing the survey document. Three
commenters indicated that the estimated burden was reasonable. Two of
the commenters, however, stated that the actual burden to DIs would be
greater than estimated because obtaining the requested information
would require a manual review of records. The Board recognizes that the
burden for each survey respondent will vary based on an institution's
recordkeeping practices and experience with check fraud, but continues
to believe that its estimate of an average of nine hours per respondent
is reasonable.
Two commenters suggested that the survey should be conducted
prospectively. A prospective approach would allow depository
institutions to collect actual data in the format the Board requires,
thus improving the accuracy and the response rate. The Board considered
this option but rejected it because a prospective survey would
significantly increase the recordkeeping burden for depository
institutions and would not likely improve the response rate. In
addition, because the Board must report to the Congress in September
1996, there is not sufficient time to permit DIs to make the necessary
programming changes to their data reporting systems, collect the data,
and provide it to the Board in time to meet the Congressionally
mandated schedule.
Six commenters suggested that additional definitions be added to
the survey and that certain language be clarified. Several of the
suggested clarifications and definitions were made to the survey
document. For example, definitions were added for the number of cases
of check fraud and the dollar amount of losses. Several commenters also
asked that the definition of ``organized and professional efforts'' in
check fraud be clarified. Because of ambiguity of this question and the
difficulty in determining a clear definition, the question has been
deleted from the survey.
Six commenters suggested that additional detail be added to some
questions or that some categories of checks be expanded. In response to
these comments, the Board expanded the scope of six questions.
Questions were expanded to address large-dollar return notifications
and their effectiveness in preventing losses; to obtain information on
the number of checks returned from the paying bank; to address DIs'
interest in modifying Regulation CC for new accounts; and to expand the
categories of fraudulent checks.
Two commenters raised questions about the survey methodology. These
commenters postulated that the survey, as proposed, would produce
biased results because participation is voluntary; depository
institutions have the option of providing estimates; and depository
institutions with less than $1 million in transaction accounts are
excluded.
The Board believes that the survey methodology is sound. The survey
sample is based on a stratified random sample of 5,200 commercial
banks, savings institutions, and credit unions, drawn to achieve a 95
percent confidence interval for the results, based on an expected
overall response rate of 32 percent. A minimum of $1 million in
transaction accounts was established to reduce the burden on smaller
institutions. In addition, while the Board would prefer that
respondents to the survey provide data on actual losses, the Board
understands that it is unrealistic to expect all institutions to
collect the required data in the format requested because of the
differences in how DIs collect data concerning check-fraud losses.
Therefore, to ensure that a significant number of DIs will be able to
respond to the survey, the survey allows for estimates. Statistical
analyses and follow-up with non-respondents will be used to test for
potential bias in the responses. For example, an institution may not
respond to the survey because it does not experience check-fraud losses
or because the data are unavailable in the requested format. Follow-up
with the non-respondents will provide further information about the
reasons, and where appropriate, such information will be integrated
into the analyses.
One commenter also questioned the content of the questionnaire. The
commenter indicated that the survey questions appeared to be biased
``toward obtaining the results that check fraud volume, losses and
costs (1) are enormous, (2) are due to the check hold law, and (3) can
be reduced by lengthening the check-hold period.'' The Board believes
that the questions in the survey will provide the information needed to
determine the magnitude of check-fraud losses and whether lengthening
the check hold period would reduce these losses. At this time, the
Board has no preconceived notions about the outcome of the survey
results. The costs and benefits of any recommended changes to
regulations will be carefully reviewed.
Several commenters addressed issues other than the survey. These
issues included arguments both for and against extending the EFAA
availability schedules; discussion of an institution's experiences with
check fraud; discussion of check-fraud prevention methods other than
modifying the EFAA; and suggestions on how the Board should evaluate
the results. The Board will take these additional comments into
consideration when developing legislative recommendations.
In addition to the above comments, the Board received seven
completed draft survey forms, indicating a good interest in the survey.
The survey questionnaire was distributed following Board approval.
Board of Governors of the Federal Reserve System, March 11,
1996.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 96-6188 Filed 3-14-96; 8:45 am]
BILLING CODE 6210-01-P