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If a servicemember borrower calls the bank to authorize a one-time payment, may the bank create a remotely created check?

The Military Lending Act regulation §232.8(e) prohibits using postdated checks or generating remotely created checks. If a servicemember borrower has forgotten to make a payment and calls the bank to authorize a one-time payment, may the bank create a remotely created check?

No. The answer to Question 18 of the December 2017 revised Interpretive Rule provides that lenders may not create remotely created checks to collect payments on covered credit. The Department of Defense rejected ABA’s request in its comment letter to allow servicemembers that option.

However, servicemember borrowers may authorize electronic payments, both one-time and recurring, provided that the lender complies with other laws, including the Electronic Fund Transfer Act and Regulation E. (November 2018)

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