Important News for Our Checking Account Customers
The changes brought on by Check 21 will improve check collection by automating many high-touch 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, state laws (Massachusetts and New York) that say that customers are entitled to receive paid original checks back with their statements are unenforceable. However, banks in those states may have to provide substitute checks with these statements.
Do all copies created from check image files qualify as substitute checks?
No, only images that meet the “substitute check” requirements qualify. Typical check image statements are not considered substitute checks.
Does this mean I won’t be getting back my canceled checks?
In some cases, you may not receive the original. If you receive canceled checks with your monthly checking account statements, some of the checks returned to you may actually be substitute checks, beginning October 28, 2004.
What if I need a copy of my canceled check?
No worries. Just contact us. We’ll have a copy out to you quickly.
What happens to my original check?
Typically, original checks are destroyed 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?
Check 21 requires that we provisionally recredit 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. We will be sending you a disclosure statement soon with more precise details on provisional recrediting 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.
