Purging the Paper Trail

Chain Store Age

Purging the Paper Trail

April 2007

By Charla L. Hausler and James E. Michel, Barnes & Thornburg LLP

Last month, the new Back-Office Conversion (BOC) rule took effect, allowing retailers to retain paper checks accepted at the point of sale and convert all checks to electronic transfers in a centralized location. For retailers with multiple checkout lanes, this simplifies the POS process and eliminates the need for imaging technology at each lane.

However, the new BOC process carries the added responsibility of what to do with the paper check after the electronic transfer has been completed. Retailers are required to keep an image of the check for at least two years, but may dispose of the actual paper at any time. (Under previous point-of purchase processes, the check was electronically imaged at each POS station and the paper check was returned to the consumer.) “There is a risk, potentially a big liability, with BOC—namely the retailer will be [accountable] for anything that happens with a check,” noted Charla Hausler, an associate in the Chicago office of Barnes & Thornburg, which is ranked among the 100 largest law firms in the United States. “Retailers will have to implement good security procedures. Checks may be locked in a safe for a period of time and then shredded, but there have to be policies in place for when and how the paper is destroyed.” Additionally, the image and information that was electronically captured must be held in a secure, preferably encrypted, database.

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