What is Check 21?
Check 21 is the name commonly used to refer to the Check Clearing for the 21^st Century Act.  This legislation, passed by congress and signed into law by the president, clears the way to incorporate electronic technology that will streamline the traditional check processing system financial institutions have relied upon for many years.

How will the system be changed?
Check 21 allows for the “truncation” of checks earlier and more often.  Truncation is the process of physically removing the check from the processing system and replacing that check with a substitute paper check.  A “substitute check” is created from an electronic image of the front and back of the original check.  Legally acceptable substitute checks depict all the information from the original and bear the legend, “This is a legal copy of your check. You can use it the same way you would use the original check.” 

What is the benefit of a substitute check?
1)       To create a substitute check, the original check must be captured as an electronic image.  This electronic data can be processed quickly and safely using the state-of-the-art transmission technology.

2)       The traditional system for processing checks was very costly and time consuming.  Because the checks to be physically transported between locations, any disruptions to our nation’s transportation system could delay the check clearing process.  Furthermore, electronic transmission will virtually eliminate the possibility of checks being lost, stolen or destroyed.

 Will Check 21 help fight check fraud?
1)       Fewer individuals will come into contact with your information during the check clearing process because Check 21 allows your original check to be physically removed from the system.  The minimized need for human contact will greatly reduce your potential exposure to identity theft.  Rest assured that electronic transmission of check data will be securely safeguarded.

2)       Additionally, the amount of time between when a check is written and when the funds are actually debited from the account will be greatly reduced.  This enhancement will reveal fraudulent activity much sooner.  The earlier criminal activity is revealed, the greater the likelihood of catching the individual illegally using your account. 

How will my check statements be affected?
If you’ve never received cancelled checks before, your account statement will not be any different.  It will continue to list your checks sequentially by number.  However, if you previously received your cancelled checks along with your account statement, you will begin to notice a mixture of actual cancelled checks and substitute checks.

 What if I need the physical check?
If you ever need a physical copy of your check, a substitute paper check can be created at any point in the process.  This substitute check is the legal equivalent of the original check.

 What if I feel the substitute check doesn’t accurately reflect the original check?
Check 21 provides consumers with specific rights regarding disputes.  If you feel that your substitute check is inaccurate, contact your account provider as soon as possible.  Your provider will investigate your claim and make you aware of any necessary adjustments.  These adjustments could potentially include recrediting your account. 

What are my rights regarding substitute checks?
1)       In certain cases, federal law provides a special procedure that allows you to request a refund for losses you suffer if a substitute check is posted to your account (for example, if you think that we withdrew the wrong amount from your account or that we withdrew money from your account more than once for the same check).  The losses you may attempt to recover under this procedure may include the amount that was withdrawn from your account and fees that were charged as a result of the withdraw (for example, bounced check fees).

2)       The amount of your refund under this procedure is limited to the amount of your loss or the amount of the substitute check, whichever is less.  You also are entitled to interest on the amount of your refund if your account is an interest-bearing account.  If your loss exceeds the amount of the substitute check, you may be able to recover additional amounts under other law.

3)       If you use this procedure, you may receive up to $2,500 of your refund (plus interest if your account earns interest) within 10 business days after we received your claim and the remainder of your refund (plus interest if your account earns interest) not later than 45 calendar days after we received your claim.

4)       We may reverse the refund (including any interest on the refund) if we later are able to demonstrate that the substitute check was correctly posted to your account.

 How do I make a claim for a refund?
If you believe that you have suffered a loss relating to a substitute check that you received and that was posted to your account, you must contact us within 40 calendar days of the date that we mailed (or otherwise delivered by a means to which you agreed) the substitute check in question or the account statement showing that the substitute check was posted to your account, whichever is later.  We will extend this time period if you were not able to make a timely claim because of extraordinary circumstances.  Your claim must include:

1)                   A description of why you have suffered a loss (for example, you think the amount withdrawn was incorrect);

2)                   An estimate of the amount of your loss;

3)                   An explanation of why the substitute check you received is insufficient to confirm that you suffered a loss, and

4)                   A copy of the substitute check and/or the following information to help us identify the substitute check: (identifying information, for example the check number, the name of the person to whom you wrote the check, the amount of the check).