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| Consumers and Check 21 |
| By Oct. 28, 2004, every bank will be required to accept substitute
checks, just as they currently accept paper checks. A substitute
check is the legal equivalent of the original check and will
include all the information contained on the original. |
| Check 21 includes several safeguards for check-writing consumers.
Check 21 helps speed check clearing, so check fraud can be discovered
faster. Faster fraud detection means faster resolution for customers.
Another safeguard: a bank that creates a substitute check is
produced in accordance with industry standards for quality. |
| All of these changes allow for faster payment processing and
even better service to the nation's banking customers. |
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| FAQ |
| What is check 21? |
| A . In a nutshell, Check 21 (the Check Clearing
Act for the 21 st Century Act) allows banks to replace original
paper checks with "substitute checks: that are made from digital
copies of the originals. |
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| Why was Check 21 Created? |
| A. Check 21 was created to reduce the time,
risks and costs associated with paper check processing. |
| Currently, checks travel on trains, planes and automobiles
during the clearing process. With Check 21, banks will be able
to send digital images of checks electronically, eliminating
the need to physically transport paper checks between banks.
Check 21 will also reduce uncontrollable transportation delays
that can be caused by weather or natural disaster |
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| What is a substitutes check? |
| A . A substitute check is a paper copy of
the digital image of your original check, with all endorsements
and is about the size of a business check. Check 21 legislation
sets standards for quality and allows for substitute checks to
be legal copies of the originals. All banks must accept the substitute
check as they would the original document. |
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| How will Check 21 impact me? |
| A. If you receive check images with your
statement, you may receive a mix of substitute and original check
images. If you don't receive check images, you may not notice
any change at all. |
| Check processing will be faster with the implementation of
Check 21. Funds may be removed from your account sooner than
they were prior to Check 21, therefore there will be less "float
time". As always, make sure you have enough money in your account
before writing a check. |
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| Is Check 21 mandatory? |
| A. Check 21 does not mandate
electronic processing of digital check images, it simply makes
it possible. For banks that choose to process checks manually,
a substitute check will be made of the image, which will be processed
as if it were the original. |
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| When will Check 21 take effect? |
| A. Check 21 was signed into
law October 28, 2003 and becomes effective October 28, 2004 |
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| Are substitute checks an acceptable proof
of payment? |
| A. Yes, everyone must accept
substitute checks beginning October 28, 2004. |
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| What happens to my original check? |
| A. After taking a digital image,
the bank may destroy your original check. If necessary, a substitute
check may be created. Since substitute checks are legal copies
of your original check, there is no need to save the original. |
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| What if I need a copy of my canceled check? |
| A. Contact the bank. We will
produce a copy for you. |
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| How will I benefit with Check 21? |
| A. You
may have earlier access to your funds and faster, more convenient
access to information about your checks. |
| You'll have better fraud protection. Faster processing
means faster detection and faster resolution. |
If you detect a problem because of a substitute
check, Check 21 requires that the bank re-credit your account,
pending an investigation. |
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| What items are subject to Check 21? |
| A. All checks, including cashier's checks, payroll
checks, personal checks and business checks are subject to Check
21. Savings bonds are not checks and therefore are not subject
to Check 21. |
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| How does Check 21 relate to electronic check
conversion (e-check)? |
| A. Check 21 involves creating
digital images of original checks, but they are still processed
under the same laws and regulations as paper checks. |
| On the other hand, electronic check conversion,
or e-check, occurs when a check is converted into an electronic
funds transfer. The transaction is then routed through the Automated
Clearing House (ACH) network, the same system used by Direct
Deposit. |
| On your monthly statement, a substitute check
will be listed with your other checks; an e-check will be listed
with other electronic funds transfers, such as automated debits
for health club memberships or a payment setup with a utility
company. |
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