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The Check 21 Act

The Check Clearing for the 21st Century Act, commonly referred to as Check 21, is a federal law that went into effect on October 28, 2004. This new law allows for changes in the way checks can be processed in the United States.

What is Check 21?

The Check 21 legislation allows banks to replace original paper checks with "substitute checks" from the electronic image of the original check. The substitute check is the legal equivalent of the original check.

Why do we need Check 21?

Check 21 was created to reduce the time, risks and costs associated with paper check processing and transportation. Currently, when you write a check from your account and it is deposited at another bank, the check must be transported by truck and/or airplane between the banks in order to be paid. This transportation of original checks is slow and makes the national payment system vulnerable to delays and losses, among other risks.

What does Check 21 do?

Check 21 authorizes banks to create substitute checks from electronic images of original checks. Substitute checks are paper recreations of original checks and are the legal equivalent of the originals. A substitute check can be presented for payment in place of the original. The ability to convert an original check to an electronic image, transmit the image and create a substitute check from it is expected to facilitate the processing of checks electronically.

Does Check 21 impact my check-writing?

No. You can continue writing checks the same way that you always have.

What is a substitute check?

A "substitute check" is created by a bank and is a paper reproduction of a digital image of an original check. The substitute check contains an image of the front and back of the original check and conforms to banking industry standards for quality.

What happens if there is a problem with a substitute check?

In the event that something is wrong with a substitute check, we recommend that you make a written request for a "re-credit" (or return) of the funds to your account. You should be aware that there are only certain instances in which you have the right to have your funds re-credited. Because it is often hard to tell when the right of re-credit applies, we recommend that you contact us or make a written request to us for a re-credit whenever a check is paid twice, a check is paid for the wrong amount, or you find something else to be in error with your checking account.

What happens to the original checks?

Since there are no requirements to retain the original checks, they may be destroyed once either a digital image of the original checks has been made, or a substitute check has been created.

Will there be any changes in my account statement?

Yes, there could be. If you receive:

  • Image Statements - you will continue to receive your image pages with images of original checks and/or substitute checks
  • Physical Return of Checks - in some cases, you may receive one or more substitute checks instead of original checks

Will checks clear faster once Check 21 becomes effective?

Over time, Check 21 should allow for an increase in the efficiency of all aspects of check clearing. The checks you write and those you deposit may clear faster, and notification of checks you deposited that are returned unpaid may occur more quickly. Remember that you should never write a check unless the funds are already cleared and in your account!

Can I choose to "opt-out" of Check 21?

No. Once Check 21 legislation went into effect on October, 28, 2004, it applies to all financial institutions in the United States and their customers. There are no "opt-out" exceptions.


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