Check 21 FAQs
Check Clearing for the
21st Century Act
Frequently Asked Questions about Check 21 (for consumers)
1. What is Check 21 and what is its basic purpose?
Check 21 is a federal law that is designed to enable banks to
handle more checks electronically, which should make check processing faster and more efficient. Today, banks often must physically move original paper checks from the bank where the checks are deposited to the bank that pays them. This transportation can be inefficient and costly. Check 21 became effective in October 2004.
2. How will Check 21 make check processing more efficient?
Instead of physically moving paper checks from one bank to another,
Check 21 will allow banks to process more checks electronically. Banks can capture a picture of the front and back of the check along with the associated payment information and transmit this information electronically. If a receiving bank or its customer requires a paper check, the bank can use the electronic picture and payment information to create a paper substitute check. This process enables banks to reduce the cost of physically handling and transporting original paper checks, which can be very expensive.
3. Is electronic check processing secure?
Electronic check processing is not new to the financial industry
and is a safe and reliable way of processing payments. It uses technology that has been developed and tested to process your check information securely.
4. What changes can I expect as Check 21 goes into effect?
Since October 28, 2004, you may receive a substitute check when you were expecting an original check. For example, if you receive canceled checks with your account statement, you might begin to receive a mixture of canceled original and substitute checks. If you receive image statements pictures of several checks on a single page), you also may notice that some of the pictures are of substitute checks.
5. Will Check 21 result in my check being paid sooner?
With Check 21, banks will likely process more checks electronically. As a result, your check may reach your bank faster and be paid sooner. Always make sure you have enough money in your account to cover the checks you write at the time that you write them.
6. Will Check 21 affect how quickly I receive funds from the checks that I deposit with my bank?
Another federal check law (Expedited Funds Availability Act) specifies the maximum time periods by which your bank must make funds available to you. Some banks, however, make funds available sooner than this law requires.
7. What is the difference between Check 21 and programs that convert checks to electronic payments?
A check you write may be processed as a check. In that case, your rights are governed by check laws and regulations. Under electronic check conversion, the check is used only as a source of information to create an electronic fund transfer and is not processed as a check. You must receive notice that your check may be processed this way. Electronic fund transfers are governed by different laws and have different consumer rights than check payments. For more information about electronic check conversion, see the brochure When Is Your Check Not a Check:
Electronic Check Conversion published by the Federal Reserve Board.
8. What is a substitute check?
A substitute check is a paper copy of the front and back of the original check. A substitute check is slightly larger than a standard personal check so that it can contain a picture of your original check. A substitute check must be printed in accordance with very specific standards so that the substitute check can be used in the same way as the original check.
9. When is a substitute check legally the same as the original check?
A substitute check is legally the same as the original check if it accurately represents the information on the original check and includes the following statement: This is a legal copy of your check. You can use it the same way you would use the original check. The substitute check must also have been handled by a bank.
If you receive a substitute check that is not legally the same as the original check and you suffer a loss related to the substitute check, Check 21 provides you with a special procedure that you can use to get your money back.
10. Can I use a substitute check as proof of payment?
Yes. You can use a substitute check as proof of payment because it is legally the same as the original check. For instance, the IRS will accept your substitute check as proof of payment. If you do not have a substitute check but have a copy of an original check or a copy of a substitute check, you usually can use these documents as proof of payment.
11. How are image statements different from substitute checks?
Instead of providing canceled checks, some banks provide customers
with image statements that show multiple pictures of canceled checks per page. The pictures on the image statement could represent an original check or a substitute check. Whether the consumer receives an original check, a substitute check, an image statement, or a line item on his or her account statement, check law protects consumers against erroneous and unauthorized check payments. In addition, Check 21 provides a special refund procedure (called expedited recredit), if you receive a substitute check. For more information, see the consumer protection section below or contact your bank.
12. Can I demand a substitute check from my bank instead of a copy?
Your bank may provide you with a substitute check, but it is not
required by law to do so. If your bank does not provide you with a substitute check, you usually can use a copy of an original check or a copy of a substitute check as your proof of payment.
13. What should I do if something is wrong with the substitute check that I receive?
A substitute check must show the front and back of the original
check and be printed in accordance with very specific standards. If you receive a substitute check that appears to have a problem, such as it contains a bad picture of your original check, contact your bank.
14. Is my bank required to tell me about substitute checks?
Under Check 21, banks are required to provide a disclosure to their consumer customers who receive canceled checks with their monthly statements. The disclosure describes substitute checks and consumer rights regarding substitute checks. Banks must provide this disclosure to existing customers not later than the first statement mailing after Check 21 becomes effective on October 28, 2004. After October 28, 2004, banks must provide this disclosure to new customers at the time the customer relationship is established. If you receive canceled checks with your account statement but did not receive the required disclosure within the timeframes described above, please request one from your bank.
Banks must also provide a disclosure when a consumer requests an original check or copy of a check and receives a substitute check. In addition, the bank must provide a disclosure if a check the consumer has deposited is returned unpaid to the consumer in the form of a substitute check.
15. Can I still get my canceled checks back?
If you get your canceled checks back with your
account statements today, you will continue to receive canceled
checks unless your bank notifies you otherwise. The only difference
will be that some of the canceled checks that you receive may
be substitute checks. You can use a substitute check the same
way you would use an original check, such as for recordkeeping
and proof-of-payment purposes.
16. Can I get my original check if I need it?
Banks are not required currently to keep your original check for
any specific length of time, and Check 21 does not add any new
retention requirements. In many cases, the original check may
be destroyed. If you request your original check from your bank,
your bank may provide you with the original check, a substitute
check, or a copy of the check.
17. Can banks or their
customers prevent others from using their original checks to create
No. Generally, any check can be used to create
a substitute check, including a personal check, corporate check,
credit card check, postal money order, and U.S. Treasury check.
However, a foreign check cannot be used to create a substitute
18. What if I receive a substitute check representing a fraudulent original check?
Check law provides protections against fraudulent
checks so that generally you are not responsible if you notify
the bank in a timely fashion. This is the case whether you receive
an original check, a substitute check, an image statement, or
a line item on your account statement. If you receive a substitute
check of a fraudulent original check, you may have additional
rights under Check 21. Contact your bank for more information.
19. How am I protected under Check 21?
Check law protects you against erroneous and unauthorized check
payments. In addition, Check 21 contains a number of new protections
for consumers. For example, Check 21 contains a special refund
procedure (called expedited recredit) for a consumer
who suffers a loss related to a substitute check he or she received.
20. What protections
do I have if I receive image statements, access pictures of my
checks online, or receive an account statement with descriptive
information about my canceled checks?
Years ago, many banks stopped providing customers with canceled
checks and, as an alternative, began providing customers with
documentation showing which checks were paid. Regardless of the
form of documentation you receive, check law protects you against
erroneous and unauthorized check payments.
21. If I suffer a loss
related to a substitute check I received, can I file a claim with
Yes. If you have received a substitute check, you can file a special claim with your bank for a refund (called an expedited recredit)
if you believe that the substitute check was incorrectly charged to your account, you lost money as a result of the substitute check being charged to your account, and you need the original check or a copy sufficient to show that the substitute check was incorrectly charged to your account.
22. Does the special refund procedure apply if I receive an image statement with a picture of a substitute check but do not receive the actual substitute check?
No. The special refund procedure applies only if you actually
received a substitute check. However, check law protects you from
improper check charges regardless of whether you receive an original
check, substitute check, image statement, or a line item on your
account statement. If you feel an error was made to your account,
contact your bank immediately.
23. How do I make a claim under the Check 21 refund procedure?
If you believe that you have suffered a loss relating to a substitute
check that you received, you should contact your bank as soon
as possible but no later than 40 days from when your bank mailed
or delivered your account statement. Your bank will ask you to
provide information it needs to investigate your claim, which
could include a description of the problem, an estimate of your
loss, and information about the substitute check.
24. How quickly must
my bank handle my claim, and when will my account be refunded?
Your bank should investigate your claim promptly. If your bank
finds that it incorrectly charged your account, the bank must
refund the amount of your claim (up to the amount of the substitute
check, plus interest if your account earns interest) within one
business day of making that decision.
If your bank is unable to determine the validity
of your claim within 10 business days after receiving it, your
bank on that day must refund the amount of your loss up to the
lesser of amount of the substitute check or $2,500, plus interest
(if your account earns interest). Unless your bank determines
that your claim is not valid, it must refund to your account any
remaining amount of your loss, up to the amount of the substitute
check, plus interest, no later than the 45th calendar day after
the bank received your claim.
If your bank later determines that your claim
was not valid, it may reverse the refund and interest it has paid
25. How will I know if my bank has refunded my account?
If your bank refunds your account, it will send you a notice by
the next business day that tells you the amount of your refund
and the date on which you may withdraw those funds. Normally,
you may withdraw your refund on the business day after your bank
refunds your account.
26. Can my bank delay
my ability to withdraw the amount that it refunds?
If your bank is still investigating your claim, it may delay your
ability to withdraw up to the first $2,500 of the refund if (1)
you are a new accountholder, (2) your account is repeatedly overdrawn,
or (3) the bank has reason to believe the claim is fraudulent.
In these cases, your bank must allow you to withdraw the funds
after determining that your claim is valid or on the 45th calendar
day after the day that you submitted your claim, whichever occurs
27. What happens if
my bank says it charged my account correctly?
If your bank determines that it correctly charged your account,
it will send you a notice by the next business day that explains
the reason for that decision and will include either the original
check or a copy of the original check that is sufficient to determine
the validity of your claim. Your bank will also either include
the documentation the bank used in making its determination or
will explain that you can request such documentation.
Contact us for more information.