FAQ: Check 21
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.
- 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
- What does a substitute check
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.
- Will substitute checks be
Check 21 may change the speed of processing that may result
in funds being withdrawn from your account sooner than in
- What happens to my original
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
- What if I need a copy of my
Just contact us and a substitute check will be provided. A
substitute check must be accepted as proof of payment.
- 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.
- What are 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.
- 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.
- 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.
- Does Check 21 preempt state
Yes. Check 21 is a federal law that supersedes any state
- Am I allowed to “opt out” of
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.
- Does Check 21 apply to business
Yes. Check 21 applies to all types of checks--consumer,
business, traveler’s, and U. S. Treasury checks.
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