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Returns and Adjustments Returns and Adjustments Section 4 - Provider Panel 2013 S G ld Th Cl i H ary 28, 2 Susan Goold - The Clearing House Angie Smith – Viewpointe Februa Cindy Rasche - Federal Reserve

Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 [email protected]

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Page 1: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

Returns and Adjustments

Returns and AdjustmentsSection 4 - Provider Panel

2013

S G ld Th Cl i H

ary

28, 2 Susan Goold - The Clearing House

Angie Smith – Viewpointe

Febr

ua Cindy Rasche - Federal Reserve

Page 2: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

SVPCO Online AdjustmentsECCHO R t d Adj t tECCHO Returns and Adjustments

February 28, 2013

Page 3: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

TCH O li AdjTCH Online Adjustments

• Secure web‐based cash letter adjustment system (accessible through SVPCOView)SVPCOView)

• Allows any financial institution to exchange adjustments electronically (paper check, substitute check, and image exchange)

• Available 24 hours, 7 days a week, y

• Maintenance Window: Saturday 10am‐2pm ET (9am‐1pm CT / 7am‐11am PT)

• Settlement occurs at 4:00pm ET each business day.

• Adjustments initiated by various departments: Item processing, Research, Returns

• Developed by adjustment personnel

3

• Live since June 2000

• Incorporated image adjustments in April 2009

Page 4: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

F d B fiFeatures and Benefits

• Faster resolutionR d ti i f ll d– Reduction in follow‐up correspondence

– Enter all adjustment case information and supporting documentation electronically and directly to the receiver of the adjustment

– As long as all the business rules are met and all required data is entered, most adjustment types settle the same day!

• Enhances Image Exchange environment:g g– Standardize the adjustment process– Replace paper with electronic forms– Attach image documents to adjustment cases (.jpg, .tiff, 

4

• Better audit and controls– Full range of daily and historical reports

Page 5: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

TCH O li Adj UTCH Online Adjustments Usage

• Growth reflects system adoption, not increase in 

SVPCO Adjustments Daily Average Volume Growthp ,

overall adjustments incidents.• All SVPCO Image Payments 

Network use 1407

1655

200

1400

1600

1800

me

Daily Average Volume Growth 

595712

1060

600

800

1000

1200

Daily Average

 Volum

0

200

400

Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13

D

5

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R l M d Si lResults Made Simple

• No software to purchase or install• Quick and painless implementationQuick and painless implementation• Secured environment

6

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Adj SAdjustment Screen

User friendly input screenscreen, 

Simply:• Select the adjustment typetype

• Input information in the highlighted fields     

To expedite the processTo expedite the process and maintain an audit trail, you can also attach supporting imaged documents

7

documents.

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Adj RAdjustment Report

Vi d i t tView and print current and historical reports for items:

P t d• Presented• Received• Pending• By department

B i h k• By image or check      (paper/IRD)

8

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P i iPricing

• Service bundled with image exchange• No additional software or maintenance fees!No additional software or maintenance fees!• No transaction fees! • Settlement fees

– Daily settlement fee of $2.50 per Settler by Settlement routing number– Fees apply only on days when there is activity

• Token fees – $100 per security token (renews every 4 years) 

E h f h h i k– Each user of the system must have a security token– Tokens are transferable at no charge

9

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U i F f SVPCO O li AdjUnique Features of SVPCO Online Adjustments

• Security focus– User accessUser access– Separation of responsibilities– Multi layer security tokens– Optional bank IP security layer

• Administrative Users• Deposit  Account Options ‐‐ An option offered by your bank as an option to 

automate and improve the adjustments process between correspondent and respondent institutions.respondent institutions.

• Web entry and browser upload / download• Flexible web reporting

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O li Adj S l O iOnline Adjustment Settlement Options

Settle adjustment transactions through:

Net Settlement – Federal Reserve account• National Net Settlement at 4:00 PM Eastern• Clearing House or SDS cash letters• Reconcile Daily Reports to Nat Net Settlement figure on Fed 

statement– Look for “021054925 SVPCO ONLINE”

Deposit Account – Account relationship at your bank (DDA account)• Correspondent cash letters• Ability to send electronic advice to customers

11

y

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Fil T f U iliFile Transfer Utility

• Upload or download files containing multiple adjustments from existing case management systemsg y

• In production (since 2002)

12

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C ibili b ECCHO d SVPCO lCompatibility between ECCHO and SVPCO rules

• Categories and subcategories:– Map to ECCHO categoriesMap to ECCHO categories– Sort and report on subcategories

• Responses to:– RFI (SOR, DISP, PHOTO) without entry– DOC ADJ  w/ and w/o entry, Duplicate Items  – OSCR

• Reversals:All i– All categories

– Before transactions has settled or received a response (where response is required)

– After, open a new case and explain reversal in Commentsp p

13

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N C f i INon‐Conforming Images

1a1 (NCI)

ECCHO TCH

1aNon Conforming Image (NCI)Image MissingIneligible item

1Non Conforming Image (NCI)Image MissingIneligible item

(NCI)Non‐conforming 

ImageInvalid RT

2Mis‐matched MICR

Ineligible itemInvalid RT

Ineligible itemInvalid RT

2aMis‐matched MICR

Poor Image qualityMICR Mismatch ImageMi di t d R t

3Not our Item

3aNot our Item

4 4a

Misdirected ReturnIneligible ItemNot Our ItemNon‐negotiable 

14

4Non‐negotiable item/NonCash Item

4aNon‐negotiable item/NonCash Item

ItemOther

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D li d EDuplicates and Errors

ECCHO TCH5bDuplicate – Item (single or multiple) –Same Bank

5Duplicate – Item (single or multiple) –Same Bank

(DI)Duplicate

Paper checkSubstitute check

6Duplicate – Item (single or multiple) –

Same BankSame Bank

6aDuplicate – item (single or multiple) –

Double Posting

(single or multiple) Different Bank

(single or multiple) Different Bank

7Amount Error – Legal 

7aAmount Error – Legal 

(EE)Encoding Error

15

gamount

gamount (MR)

Misread

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W d I d i Cl iWarranty and Indemnity Claims

9Warranty Indemnity 

ECCHO TCH

10 Rules 8 & 9 Claim

Claims (WIC)Warranty Indemnity 

Claim

12

• Expedited Recreditfor Banks

• Breach of Warranty Claim Rule 8+9

11Disclaim Warranty –Rule 8 & 9

12a12Unauthorized RCC Warranty Claim

• Other12aUnauthorized RCC Warranty Claim

21E di d R di

16

Expedited Recredit (Substitute Checks only)

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C i Cl iCompensation Claims

ECCHO TCH

23Claim of Damage due to under‐encoding

Compensation Claim

23aClaim of Damage due to under‐encoding

24Pricing Error Adjustment

Compensation Claim

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R d Pl d IRecent and Planned Improvements

• Security and administrative rewrite; file transfer upgrades – April 2011• 2012 maintenance – February 20132012 maintenance  February 2013• 2013 maintenance – March S&P ‐ TBD 2013 – functionality and fixes• 2013 enhancements – April S&P ‐ TBD 2013 ‐ adopt ECCHO rules (plus TCH 

rules); enhancements

18

Page 19: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

Q iQuestions

19

Page 20: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

C UContact Us

Susan GooldVice PresidentVice President

SVPCO Product Manager212‐613‐9861

[email protected]

Customer SupportThe Clearing House

For more information on SVPCO Online Adjustments go to: www.svpco.com

g800.875.2242

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Viewpointe National Settlement SystemHandling Adjustments

© 2013 Viewpointe Clearing, Settlement and Association Services. All Rights Reserved. Viewpointe, through its Direct Membership with NACHA, is a specially recognized and licensed provider of ACH education, publications and support. Regional Payments Associations are directly engaged in the NACHA rulemaking process and Accredited ACH Professional (AAP) program. NACHA owns the copyright for the NACHA Operating Rules & Guidelines. The Accredited ACH Professional (AAP) is a service mark of NACHA.

Page 22: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

Disclaimer

This course provides an overview of Viewpointe’s National Settlement Systemas it relates to handling adjustments. Responsibility for compliance with alll l d l t i t i t ll ti ith i di id llegal and regulatory requirements remains at all times with individual users.This presentation and the information contained in it are not intended to beused as legal advice and Viewpointe provides this material “as is” withoutwarranty of any kind, either express or implied, including, but not limited to,a a y o a y d, e e e p ess o p ed, c ud g, bu o ed o,the implied warranties of merchantability or fitness for a particular purpose.This document could include technical inaccuracies or typographical errorsand individual users are responsible for verifying any information containedhereinherein.

The information in this document and discussed in this presentation is theexclusive property of Viewpointe Clearing, Settlement & Association Services,p p y p gLLC. It may not be copied, disclosed, or distributed, in whole or in part,without the express written permission of Viewpointe.

22Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe.

Page 23: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

X9 ADJUSTMENT INFORMATION

All adjustment transactions will be entered into the Adjustment Exchange Presentment of adjustment entries must completed 1:00pm CT and confirmation processes must be completed no later than 2:00pm CT each business day All adjustment transactions that are confirmed by 2:00pm CT will be settled through the as assigned Any adjustment that is non confirmed or has no action is taken y jwithin 5 business of the non confirmation action or presentment date, the item will automatically drop from the system and will NOT settleAll settlement related reports should be accessed through the Exchange For questions concerning X9 adjustment settlement, contact

23Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe.

q g j ,VPCS&AS Operations at 866-593-8629

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ReportsReport information varies:

Report typeDate ranges availableDate ranges available

• For a given date range• For a single date selected

Level of reportingLevel of reporting• Participant• Holding Company• Settler• Settler

If applicable, they can be filtered by CLTInformation displayed

• Summarized• Summarized• Detailed

24Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe.

Page 25: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

Viewpointe: Adjustment Type

Viewpointe Adjustments are in the 161 Exchange All codes and required fields are included in the adjustmentAll codes and required fields are included in the adjustment matrixRequired fields are setup to match requirements within the ECCHO RulesECCHO RulesCodes are different

Example: Unauthorized Remotely Created Check – R8C

25Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe.

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Adjustment Codes and Required

26Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe.

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Adjustment Codes and Required Fields cont.

27Confidential & Proprietary. © 2013 Viewpointe Archive Services, LLC. All Rights Reserved. May not be copied or distributed without the express written permission of Viewpointe.

Page 28: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

Thank you

© 2013 Viewpointe Clearing, Settlement and Association Services. All Rights Reserved. Viewpointe, through its Direct Membership with NACHA, is a specially recognized and licensed provider of ACH education, publications and support. Regional Payments Associations are directly engaged in the NACHA rulemaking process and Accredited ACH Professional (AAP) program. NACHA owns the copyright for the NACHA Operating Rules & Guidelines. The Accredited ACH Professional (AAP) is a service mark of NACHA.

Page 29: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

Internal FR

Federal Reserve Federal Reserve Check Adjustments UpdateCheck Adjustments UpdateCindy Rasche, Vice President and National Check Adjustments Officery jRetail Payments OfficeFederal Reserve Bank of AtlantaFebruary 27, 2013y ,

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Page 30: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

AgendaInternal FR

• Background / Contextg• “Top Five” Adjustment Types

– Trends and Actions to Streamline Reporting, Research p gand Resolution

• Recent and Planned Operational Changes• Resources• Discussion and Feedback

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Page 31: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

Background / ContextInternal FR

• Goal: Handle adjustment requests as efficiently j q yand effectively as possible to minimize financial risk and provide high quality service to our customers, taking into consideration:– Legal and contractual requirements and responsibilities

B l b t ti– Balance between parties– Differing needs and capabilities of our customers– Ongoing support of electronification efforts– Ongoing support of electronification efforts– Evolution as a service provider

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Page 32: Returns and Adjustments - ECCHO Returns and Adjustments... · Returns and Adjustments ... Non Conforming Image (NCI) Image ... SVPCO Product Manager 212‐613‐9861 Susan.goold@theclearinghouse.org

“Top Five” Adjustment TypesInternal FR

• Five adjustment types Incoming Volume: j ypaccount for 90% of the cases received year-

YTD Through February 8

to-date:– PAID

ENC

PAIDENCNCH

– ENC– NCH– PEA

PEAWIC/URCCAll Other– PEA

– WIC (URCC)

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PAID AdjustmentsInternal FR

• Consistently the most prevalent adjustment type in y p j ypthe Check 21 environment– 34% of incoming volume YTD

• Nature of duplications has changed over time– Initially caused predominantly by financial institutions

d i th t d i f iduring the capture and processing of images– Offsets internal within the banking system

Evolved to more externally driven sources often – Evolved to more externally driven sources, often involving more than one depositing bank

• Need to expedite research and resolution to pminimize financial risk

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PAID AdjustmentsInternal FR

• Reinforced procedures associated with item preported as paid– In situation in which duplicate image(s) and/or

substitute check(s) were received, the receiver has the choice as to which item to report as the duplicate

– Item reported as duplicate will drive initial handling Item reported as duplicate will drive initial handling, research and resolution

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PAID AdjustmentsInternal FR

• Upcoming changes to streamline reporting and p g g p gresolution– New fields to capture information on “other” item

– FCL1: From Cash Letter– TCL1: To Cash Letter

CLD1 C h L tt D t– CLD1: Cash Letter Date– SEQ1: Sequence Number

Documents to follow to become optional unless multiple – Documents to follow to become optional unless multiple items are being reported in a single adjustment request

– Specific implementation date to be announced, but expected to become effective during the second half of 2013

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Encoding Error AdjustmentsInternal FR

• Second most prevalent adjustment typep j yp– 25% of incoming volume YTD

• Historically have consistently represented a y y psubstantial share of incoming volume

• Recent changes to streamline reporting and resolution– Documents to follow became optional effective May 21,

20122012– Edits modified on same date to ensure consistent and

logical information is providedg p

36

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Non-Cash Item/Non-Conforming Item Adjustments

Internal FRj

• Items reported as non-conforming by the receiving p g y ginstitution– Examples (not all inclusive)

• Incomplete or unusable image• Missing or incorrect legal legend• MICR mismatch

– May be resolved as NCIs or NCHs depending on method of deposit

• Third most prevalent adjustment type– 14% of incoming volume YTD

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Non-Cash Item/Non-Conforming Item Adjustments

Internal FRj

• Desire to charge back to depositing institution as g p gquickly as possible so that original item or a sufficient copy may be presented/returned

• Recent changes to streamline reporting and resolution– Documents to follow became optional effective May 21,

2012– Additional information now required to facilitate – Additional information now required to facilitate

research

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Pricing Error AdjustmentsInternal FR

• New adjustment type introduced effective April 16, j yp p ,2012 to support the implementation of image-enabled processing of redeemed savings bonds

• Adjustments initiated by the Bureau of the Public Debt

• Fourth most prevalent adjustment type– 14% of incoming volume YTD

• Efforts underway to identify the most common sources and causes of errors so they can be addressedaddressed

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Warranty Indemnity Claim Adjustments: Unauthorized Remotely Created Checks

Internal FRy

• Adjustment process developed to support Reg CC j p p pp gwarranty claims involving unauthorized remotely created checks effective July 1, 2006

• Fifth most prevalent adjustment type– 3% of incoming volume YTD

• Discussions underway as to whether there is value in creating a new investigation type specific to URCC (di ti t f Ch k 21 t d URCCs (distinct from Check 21 warranty and indemnity claims) to facilitate identification, research and resolutionresearch and resolution

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Recent and Planned Operational ChangesInternal FR

• Assumed/assuming responsibility for adjustments g p y jassociated with:– redeemed savings bonds effective business date of

April 16, 2012– Treasury checks effective business date of February 4,

2013 2013 – Postal Money Orders effective late first quarter 2013

• Various changes to case submission requirements Various changes to case submission requirements effective May 21, 2012

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Recent and Planned Operational ChangesInternal FR

• Additional information provided on NCI corrections p(generated out of check processing) effective October 29, 2012

• Migration of adjustments-related paper processing to FRB Atlanta effective December 17, 2012

• Modification of procedures relative to processing of NOI adjustments effective December 17, 2012

• Evaluating alternatives to current DTF process for future implementation

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Resources – Check Adjustments WebinarsInternal FR

Webinar TopicsWebinar Topics• Basic Principles and Concepts of Check 21 Adjustments• Basic Principles and Concepts of Endorsements and Not Our

Items (NOIs)• Basic Principles and Concepts of FedLine Web and Documents

to Follow• Basic Principles and Concepts of Forward and Return Check

Adjustments• Check Adjustments Insights Into Investigation Types (ITYPs)• Check Adjustments Insights Into Investigation Types (ITYPs)• Processing Cash Letters and Adjustments for Government Items• Check Adjustments Resources – **Free Event**j

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Resources – On-LineInternal FR

On-Line ResourcesOn Line Resources• Check Adjustments Quick Reference Guide• Check Adjustments CommunicationsCheck Adjustments Communications• Check Adjustments Computer Interface Protocol

Specifications (CIPS)Specifications (CIPS)• Check Adjustments Frequently Asked Questions• Check Adjustments TipsCheck Adjustments Tips• Check Services eLearning Tool

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Resources – Customer SupportInternal FR

Check Customer SupportCheck Customer Support(877) FRB-CHKS or(877) 372-2457(877) 372 2457

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Resources - OtherInternal FR

Check Adjustment Automated Status ReportCheck Adjustment Automated Status ReportAvailable to FedLine® Access Solutions Customers

Additional Informationhtt //f b i / ti / h k dj thttp://frbservices.org/operations/checkadjustm

ents/index.html

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