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»FAQ: Check 21
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FAQ: Check 21
  1. What is Check 21?
    Check 21 is a new federal law that becomes official on October 28, 2004. Check 21 facilitates the broader use of electronic check processing. Check 21 accomplishes this by authorizing a new negotiable instrument called a substitute check.
  2. What is a substitute check?
    A substitute check is simply a paper copy created from an electronic image of the original paper check (front and back, with all endorsements) and is suitable for automated processing in the same manner as the original paper check. It’s a legally sanctioned document with all the rights and obligations given to the original paper check written from your checkbook. Each substitute check must include a statement identifying it as a legal copy of the original paper check.
  3. What does a substitute check look like?
    A substitute check is a paper reproduction of a digital image of an original check. Substitute checks contain an image of the front and back of the original check.
  4. Front:
    Front of Check
    Back of Check
  5. Will substitute checks be processed faster?
    Check 21 may change the speed of processing that may result in funds being withdrawn from your account sooner than in today’s environment.
  6. What happens to my original check?
    In most cases, original paper checks will be destroyed once the check is imaged. Check 21 does not regulate the retention of original paper checks. Check retention time periods are set by the financial institution.
  7. What if I need a copy of my cancelled check?
    Just contact us and a substitute check will be provided. A substitute check must be accepted as proof of payment.
  8. What do I do if there is an error involving a substitute check?
    Immediately contact us if you suspect an error. Check 21 requires that we provisionally re-credit your account. We will send you a disclosure statement with more precise details on your legal rights and how to make a claim.
  9. What are the consumer protections?
    The consumer protection provisions contained in Check 21 are called “expedited re-credit” provisions and pertain specifically to substitute checks. The expedited re-credit provisions provide you with a mechanism to make a claim when you feel that a substitute check was wrongfully charged against your account. There are specific steps you must follow when making the claim, and there are certain steps for the credit union to follow, as well as timetables built in for addressing your claim.
  10. How much time do I have to report a suspected error?
    You have 40 calendar days from the later of two dates¾either the date when your statement was delivered or 40 calendar days from the date the suspect substitute check was made available to you.
  11. How much time does MY Credit Union have to address my claim?
    Check 21 requires MY Credit Union to re-credit your account no later than the end of the business day following the business day on which our credit union determined that your claim was valid or on the tenth business day if our credit union has not yet determined the validity of your claim.
  12. Does Check 21 preempt state law?
    Yes. Check 21 is a federal law that supersedes any state law.
  13. Am I allowed to “opt out” of Check 21?
    No. Once Check 21 legislation goes into effect on October 28, 2004, it will apply to all financial institutions and their customers. There will be no “opt out” expectations.
  14. Does Check 21 apply to business checking accounts?
    Yes. Check 21 applies to all types of checks--consumer, business, traveler’s, and U. S. Treasury checks.
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