Check 21 Act

Check 21 Act

The Check 21 Act is legislation that was passed on October 28, 2004 permitting entities who process checks to create what is considered a "substitute check" -a paper reproduction (front and back) of the original check. These substitute checks contain all of the information on the original check and will bear the legend: "This is a legal copy of your check. You can use it the same way you would use the original check." First an electronic image of the original check if created and then the original paper check is "truncated" or taken out of circulation.

Why create a new check?

  • Check processing systems used to rely on physically transporting paper checks, which was costly and time consuming. With this new imaging system, checks can now be sent quickly by electronic means decreasing processing time and cost.
  • Check fraud and identity theft can be detected sooner due to the shorter processing time and less human contact involved. Check 21 is more secure and ensures the continuous flow of money despite severe weather or natural disaster.
  • Safety measures are built into the Check 21 act to ensure accuracy of your accounts. Errors may be clarified more rapidly.

Will Check 21 affect float time?

Yes, accelerated check processing will result in reduced "float time"-the amount of time between the writing and the cashing of a check. For this reason it is important to make sure sufficient funds are available in your account to avoid overdraft charges.

What if there is a dispute and the retailer will not accept the substitute check as proof of payment?

The substitute check is a legal equivalent of the original. Courts, retailers, and service providers are required to accept substitute checks as proof of payment.

What will I get back with my statement?

Not all checks that you write will be changed into substitute checks. If you currently receive your processed check back with your statement, you may notice a combination of original and substitute checks.

What is an e-check or electronic check conversion?

An e-check is an electronic funds transfer initiated by a check. This transaction is routed through the Automated Clearing House (ACH) network. This happens when a retailer takes your check, scans it for encoded financial information and gets your authorization prior to initiating the transfer. The original check is not returned to the bank. Instead, it will appear on your statement as an ACH or withdraw item.

What if there is a problem with a substitute check?

If you believe there is an issue or error with a substitute check, contact us immediately (you may be asked to submit your claim in writing). We will review your claim, and, if warranted, re-credit your account. Please see a Customer Service Representive for more information.