Education Center > Check 21 Act

Check 21 Act


What is The Check 21 Act?


The Check 21 act is landmark legislation that will take effect October 28, 2004. It will permit any person financial institution that processes a check to create what the act dubs a “substitute check,” a paper reproduction (front and back) of the original check. These checks will contain all of the information contained 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.”




What will I get back with my statement?

Not all checks you write will be transformed into substitute checks. However, if a substitute check is created it is very likely that you won't see the original check again. If you currently receive your processed checks with your account statement we cannot guarantee that you will continue to receive your original checks. If you currently view your check images on-line, you may begin to notice a combination of original check images and substitute check images.


Why create a substitute check?

There are many good reasons for the creation of substitute checks. Currently, the check processing system relies on physically transporting paper checks from one location to the next; and, in the event of bad weather, the system can get bogged down. In addition to the time constraints, it costs millions of dollars every year to transport and process paper checks. As a result of authorizing substitute checks, the Check 21 Act will foster the electronic processing of checks because the substitute check process begins by creating an electronic image of the check. By its very nature, the electronic check image can be conveyed and processed electronically, decreasing processing time and transportation costs while reducing the likelihood of items being lost or destroyed in transit. If a physical check is ever needed, the electronic image can be used to create a paper reproduction (or substitute check) at any point in the process.


How does the Check 21 Act affect the possibility of someone stealing my identity or using my account to write fraudulent checks?

Relying on check images, instead of paper checks, should make it less likely that an identity thief will come into possession of the personal financial information located on your check. The original check is physically taken out of the processing stream, and the security of electronic channels limits human contact with your financial information. Also, the expedited processing time should reduce the ability of anyone trying to use your account to commit check fraud. A short processing period means you should be able to identify forged or altered items sooner thereby increasing the likelihood of catching the fraudster.


How does the Check 21 Act affect float time?

Accelerated check processing also means a reduction in the so-called float time, which is the amount of time between the writing and the cashing of a check.


What if the original check and its substitute get processed?

This is a natural question to ask. And, the answer is that in order to process a substitute check, a financial institution must warrant that the original check will not be processed. The check's drafter will be able to submit a claim in the unlikely event that the original check and the substitute check are both processed.


What if the substitute check is not an accurate image of the check I wrote and I need the original to prove my claim?

The Check 21 Act provides consumers with specific re-crediting rights. If you believe the substitute check does not accurately reflect the transaction, contact us immediately (you may be asked to submit your claim in writing). After receiving your claim, we will investigate the matter and contact you in response and, if warranted, re-credit your account.


What if there is a dispute and the retailer or service provider won't accept the substitute check as proof of payment?

The substitute check is the legal equivalent of the original. Courts, retailers, and service providers are all required to accept the substitute check as proof of payment in the same manner as they would accept the original.

If you have more questions about the Check 21 Act, please contact a customer service representative.

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