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Check 21 Act - Frequently Asked Questions

A federal law – the Check 21 Act – necessitates some changes in the way your paid checks are handled. As a result, customers who receive canceled checks in their monthly checking account statements (as well as those receiving image statements and those who access statements online) will notice some of the checks look different. Customers may receive “substitute checks” instead if the depositing bank re-converts the original check, under the Check 21 Act.

The changes brought on by Check 21 will improve check collection by automating many labor-intensive procedures. The result should be faster, more efficient clearing and posting of check payments.


What does Check 21 do, and why should I care?

Check 21 creates a new legal document, called the “substitute check,” which can be used for proof of payment or for any other reason that might require an original canceled check. Beginning October 28, 2004, at least some of the checks or check copies you receive from us may be substitute checks.


What, exactly, is a "substitute" check?

A substitute check is a legally sanctioned document, with all the rights and obligations given the original check written from your checkbook. Substitute checks are paper copies created from electronic images of original paper checks (front and back, with all endorsements). Each substitute check also includes a statement identifying it as a legal copy of the original check.


Does Check 21 preempt state law?

Check 21 supersedes any state law, including provisions of the Uniform Commercial Code or state laws that are inconsistent with this new federal law. Thus, any state laws that say that customers are entitled to receive paid original checks back with their statements are unenforceable.


Can institutions or their customers “opt out” of Check 21?

Under the Act, no institution or any of its customers may “opt out” of the Act; they all must accept the substitute check in lieu of the original paper check. The substitute check is the legal equivalent of the original check and neither the customer nor the customer’s bank can refuse to accept a substitute check because it is a substitute check and not the original check.


Can businesses, courts, or governmental organizations refuse to accept substitute checks as proof of payment?

No. A substitute check that meets all the requirements of the Act (accurate image plus legend) is the legal equivalent of the original check and must be accepted as proof or payment.


Does the Act apply to all types of customer accounts or only to consumer accounts?

Every check is eligible for conversion to a substitute check and the Act applies to every check that is converted into a substitute check; this includes both consumer and business accounts


What about paper checks I write to a store merchant or to billers when I mail in my payments that are converted into electronic debits?

These do not qualify as substitute checks. These are examples of a different kind of check conversion, using the automated clearing house (ACH) system. Your checks are converted into an electronic format and not returned to you. Payment is posted to your account and information from your checks, such as check number and payee, is printed on your bank statement.


Do all copies created from check image files qualify as substitute checks?

No, check images do not meet the “substitute check” requirements.


Does this mean I won’t be getting back my canceled checks?

You may not receive the originals. If you receive cancelled checks with your monthly checking account statements, some of the checks returned to you may actually be substitute checks, beginning October 28, 2004.


What happens to my original check?

Typically, original checks are destroyed by the processing bank which re-converted the item, once the check is digitized. There are no requirements governing the retention of original checks. Substitute checks are legal substitutes for proof of payment.


What if there’s an error involving a substitute check?

For consumers, Check 21 requires that we provisionally re-credit your account, usually within ten business days, for any substitute check you receive and dispute. Please review your monthly checking account statements and contact us immediately if you suspect an error. Please ask for our separate disclosure statement with more precise details on provisional re-crediting in cases of errors involving substitute checks.


What are the implications for my account management practices?

Checks you write should clear sooner, raising the possibility that some checks will be returned NSF if there were non-sufficient funds in the account when you wrote the check. You should not write checks for amounts that can’t be covered by funds already in your checking accounts.


What does a substitute check look like?

check front image
Front of substitute check

check back image
Back of substitute check

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