WASHINGTON (6/6/11)—A Federal Reserve proposal to amend Regulation CC to increase next business day availability and encourage electronic check processing and returns “would substantially increase fraud-related and compliance costs if adopted,” the Credit Union National Association (CUNA) said in a Friday comment letter. CUNA is concerned by several aspects of the Fed proposal, which aims to facilitate the development of a fully-electronic check system. The proposal implements portions of the Dodd-Frank Act that increase next business day availability. Credit unions would need to make these changes by July 21. CUNA criticized portions of the proposal that would shorten the reasonable additional hold extension from 5 to 2 business days for most checks, saying that this decrease in time would likely increase check fraud risk and loss exposure for credit unions. Increased instances of fraud are also a risk presented by portions of the amendments that would force credit unions and other financial institutions to increase to $200 the amount of deposited funds that will be made available for next business day availability. CUNA said that increasing this threshold is consistent with Dodd-Frank Act requirements, but noted that the change could increase the amount of funds that are lost due to check fraud. The Fed’s requirement that expeditious check returns only be provided to institutions that receive returned checks electronically was also questioned, with CUNA noting that many smaller institutions “disproportionately rely on paper returns” and “have fewer resources to manage fraud risk and exposure.” CUNA did, however, support the proposed elimination of references to nonlocal checks as well as keeping case-by-case holds. For the full comment letter, use the resource link.