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General Information
Q:
What is Check 21 and what is its basic purposes?
A: Check 21 is a federal law that is designed to enable banks to
handle more checks electronically, which should make check
processing faster and more efficient. Today, banks must
physically move original paper checks from the bank where the
checks are deposited to the bank that pays them. This
transportation can be inefficient and costly. Check 21 becomes
effective on October 28, 2004.
Q: How will Check 21 make check processing
more efficient?
A: Instead of physically moving paper checks form one bank to
another, Check 21 will allow banks to process more checks
electronically. Banks can capture a picture of the front and
back of the check along with the associated payment
information and transmit this information electronically. If a
receiving bank or its customer requires a paper check, the
bank can use the electronic picture and payment information to
create a paper "substitute check." This process enables banks
to reduce the cost of physically handling and transporting
original paper checks, which can be very expensive.
Electronic check processing is not new to the financial
industry and is a safe and reliable way of processing
payments. It uses technology that has been developed and
tested to process your check information securely.
Q: What changes can I expect when Check 21
goes into effect?
A: After October 28, 2004, you may receive a substitute check
when you were expecting an original check. For example,
because you receive image statements (pictures of several
checks on a single page) you may notice that some of the
pictures are of substitute checks.
Q: Will Check 21 result in my check being paid
sooner?
A: With
Check 21, banks will likely process more checks
electronically. As a result, your check may reach your bank
faster and be paid sooner. Always make sure you have enough
money in your account to cover the checks you write at the
time that you write them.
Q: What is the difference between Check
21 and programs that convert checks to electronic payments?
A: A
check you write may be processed as a check. In that case,
your rights are governed by check laws and regulations. Under
electronic check conversion, the check is used only as a
source of information to create an electronic fund transfer
and is not processed as a check. You must receive notice
that your check may be processed this way. Electronic fund
transfers are governed by different laws and have different
consumer rights than check payments.
Substitute Checks
Q: What is a substitute check?
A: A
substitute check is a paper copy of the front and back of the
original check. A substitute check is slightly larger than a
standard personal check so that it can contain a picture of
your original check. A substitute check must be printed in
accordance with very specific standards so that the substitute
check can be used in the same way as the original check.
Q: When is a substitute check legally the same
as the original check?
A: A
substitute check is legally the same as the original check if
it accurately represents the information on the original check
and includes the following statement: "This is a legal
copy of your check. You can use it the same way you would use
the original check." The substitute check must also have been
handled by a bank.
Q: Can I use a substitute check as proof of
payment?
A: Yes!
You can use a substitute check as proof of payment because it
is legally the same as the original check. For instance, the
IRS will accept your substitute check as proof of payment. If
you do not have a substitute check but have a copy of an
original check or a copy of a substitute check, you usually
can use these documents as proof of payment.
Q: How are image statements different from
substitute checks?
A: Instead of providing canceled checks, some banks provide
customers with image statements that show multiple pictures of
canceled checks per page. The pictures on the image statement
could represent an original check or a substitute check.
Whether you receive an original check, a substitute check, an
image statement, or a line item on your account statement,
check law protects you against erroneous and unauthorized
check payments.
Q: Can I demand a substitute check from my
bank instead of a copy?
A: Your
bank may provide you with a substitute check, but it is not
required by law to do so. If your bank does not provide you
with a substitute check, you usually can use a copy of an
original check or a copy of a substitute check as your proof
of payment.
Q: What should I do if something is wrong with
the substitute check that I receive?
A: A
substitute check must show the front and back of the original
check and be printed in accordance with very specific
standards. If you receive a substitute check that appears to
have a problem (i.e., it contains a bad picture of your
original check), contact your bank.
Q: Can I get my original check if I need it?
A: Banks are not required currently to keep your original check
for any specific length of time, and Check 21 does not add any
new retention requirements. In many cases, the original check
may be destroyed. If you request your original check from your
bank, your bank may provide you with the original check, a
substitute check, or a copy of the check.
Q: Can banks or their customers prevent others
from using their original checks to create substitute checks?
A: No!
Generally, any check can be used to create a substitute check,
including a personal check, corporate check, credit card
check, postal money order, and U.S. Treasury check. However, a
foreign check cannot be used to create a substitute check.
Q: What if I receive a substitute check
representing a fraudulent original check?
A:
Check law provides protections against fraudulent checks so
that generally you are not responsible if you notify the bank
in a timely fashion. This is the case whether you receive an
original check, a substitute check, an image statement, or a
line item on your account statement.
Consumer Protection
Q:
What
protections do I have if I receive image statements or receive
an account statement with descriptive information about my
canceled checks?
A: Years ago, many banks stopped providing customers
with canceled checks and, as an alternative, began providing
customers with documentation showing which
checks were paid. Regardless of the form of documentation you
receive, check law
protects you against erroneous and unauthorized check
payments. Please
contact your bank if there is an error with a check paid on
your account.
Q:
How do I make
sure my checks are of good image quality?
A: In order to better protect you from potential
fraudulent activity and ensure readily legible check images,
Lafayette Savings Bank highly recommends that you use only
blue or black ink when you write your checks. Other colors of
ink and gel pen ink will make checks difficult to read,
leading to problems in processing of your checks and possibly
causing incorrect amounts to be deducted from your account. In
addition, ordering your checks through the bank's recommended
vendor, Deluxe, will also help protect you.
Click here to print
this information
Click here for additional information from the Federal
Reserve.
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