Jet
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This has caused a lot of confusion and unnecessary fines at our institution and I think not only should there be clearer knowledge articles on the lost item processing fee but there should be an option allowing you to configure whether you want them to automatically be waived or not.
We found a workaround tackling the fines that resulted by bulk waiving the fines by type and selecting lost item processing fee, but this still requires some level of staff intervention when, for our institution, we would prefer this to mirror the behaviour of our lost item replacement fee settings.