Procedure for Collecting and Recording Checks Returned to the Gaming Licensee after Deposit

A system of internal controls submitted by a gaming licensee in accordance with 205 CMR 138.02 shall include a description of its policies and procedures governing the collection and recording of checks returned to the gaming establishment after deposit which incorporate, at a minimum, the following: (1) All dishonored checks returned by a bank after deposit shall be returned directly to the accounting department which shall notify the collections department and provide copies of the returned item(s). The original check will be given the check bank cashier who will control the item. Such employees shall have no incompatible functions. (2) All debt collection practices must be conducted in accordance with all applicable state and federal laws including 940 CMR 7.00: Debt Collection Regulations, M.G.L. c. 93A, § 2, and M.G.L. c. 93, § 49. Provided, further, that a gaming licensee's debt collection policy shall: (a) not allow for placement of a lien on a patron's primary residence; and (b) prohibit the commencement of criminal proceedings or other use of criminal process unless the gaming licensee can show that there were insufficient funds in the patron's account at the time the patron signed the counter check. Gaming licensees are prohibited from selling or pledging as collateral any debt owed to the gaming licensee as a result of a gaming loss, including the failure to pay off a counter check issued under an extension of credit, provided however, a gaming licensee may pledge such gaming debt as collateral for a commercial loan to finance the licensee's gaming operations or may sell such gaming debt in connection with the sale of all of its assets in connection with a change of ownership and/or control of the gaming establishment. (3) Debt collection shall be limited to key gaming employees or an attorney acting directly on behalf of a gaming licensees; provided, however, that a keygaming employee shall not make any such collections if that employee serves as a junket representative for the gaming licensee. Such procedure shall ensure that any key gaming employee engaged in debt collections does not have any incompatible functions. Any verbal or written communication with patrons regarding collection efforts shall be made with the full knowledge of the collection employees and shall be documented. Provided, 205 CMR 138.46(3) shall not be construed to prohibit marketing personnel licensed to the level of a key gaming employee from discussing with a patron the status of the patron's outstanding counter checks provided that any such communication is with full knowledge of the collection employees and is documented. (4) Continuous records of all returned checks shall be maintained by accounting department employees with no incompatible functions. Such records shall include, at a minimum, the following: (a) The date of the check; (b) The name and address of the drawer of the check; (c) The amount of the check; (d) The date(s) the check was dishonored; (e) The Counter Check serial number for Counter Checks; and (f) The date(s) and amount(s) of any collections received on the check after being returned by a bank, including the date(s) and amount(s) of any complimentary cash gifts applied as payment on the check after being returned by a bank. (5) If a gaming licensee determines that a Counter Check was returned by a bank because the bank name, the bank routing number, the patron's bank account number or the micro-encoding number contained on the check was incorrect due to a data entry error (e.g., a misspelling, a wrong number or a transposition of numbers), a check bank cashier may correct the erroneous entry and cause the check to be re-deposited. Any such procedure shall, at a minimum, include: (a) A description of the manner in which the error will be corrected by the check bank cashier; (b) The creation of documentation and control procedures that will permit both the check bank cashier and the gaming accounting department to identify and compare a copy of the uncorrected check that was originally deposited and the corresponding corrected check that was re-deposited. (c) The written approval of a cage supervisor prior to the alteration of any check by a check bank cashier; and (d) A prohibition against using 205 CMR 138.46(5) as a basis to change the verified bank account on which the Counter Check was originally drawn. (6) Statements shall be sent to patrons and the collections department at the gaming establishment, by accounting department employees with no incompatible functions, in a reasonably prompt manner upon initial receipt of a returned check or immediately upon receipt of a check returned for a second time if the check was immediately re-deposited pursuant to 205 CMR 138.46(5), and such statements shall include, but not be limited to, the following: (a) The name and address of the drawer; (b) The date of the check; (c) The amount of the check; and (d) The date(s) and amount(s) of any collections received on the check after being returned by the bank. (7) Patrons to whom statements are sent shall be advised of a contact telephone number, a return address and the department to which replies shall be sent. (8) Employees with no incompatible functions shall receive directly and shall initially record all collections. (9) Copies of statements and other documents supporting collection efforts shall be maintained and controlled by accounting department employees. (10) A record of all collection efforts shall be recorded and maintained by the collection area within the accounting department. (11) Listings of uncollectible checks shall be approved in writing by, at a minimum, the chief executive officer or the chief gaming executive, a key gaming employee identified and approved by the commission as part of the gaming licensee's system of internal controls, and the controller or the person to whom the controller directly reports; provided that, with the exception of the chief executive officer and chief gaming executive, none of the foregoing persons shall also have the authority to approve credit. All such uncollectible checks and listings shall be maintained and controlled by accounting department employees. A continuous trial balance of all uncollectible checks shall be maintained by employees of the accounting department. The continuous trial balance shall be adjusted for any subsequent collections.