A new federal law – Check 21 – goes
into effect on October 28, 2004. It means some changes are in store for the
way your paid checks are handled.
These changes will mean:
These Check 21 changes mean automation will be used to electronically clear
and post checks faster, more efficiently. Physically transporting checks across
town, the state or across the country will be a thing of the past.
| Q: |
What does Check 21 do, and why should I
care?
|
| A: |
Check
21 creates a new legal document, called the “substitute
check”, which can be used for proof of payment or for
any other reason that might require an original canceled
check. Beginning October 28, 2004, at least some of the checks
or check images you receive from us may be substitute checks.
|
| Q: |
What, exactly, is a “substitute check”?
|
| A: |
A substitute
check is a legally sanctioned document, with all the rights
and obligations given the original check written from your
checkbook. Substitute checks are paper copies created from
electronic images of original paper checks (front and back,
with all endorsements). Each substitute check also includes
a statement identifying it as a legal copy of the original
check.
|
| Q: |
Why not just keep sending back to me my
own canceled paper checks?
|
| A: |
Currently most
checks must be physically transported across town, across
state or across the country for clearing. Because of this
new law, check images can travel these distances electronically,
allowing for faster check clearing, lower overhead costs,
and better fraud prevention.
|
| Q: |
Does Check 21 preempt state law?
|
| A: |
Check 21 supersedes
any state law, including provisions of the Uniform Commercial
Code or state laws that are inconsistent with this new federal
law. Thus, state laws (Massachusetts and New York) that say
that customers are entitled to received paid original checks
back with their statements are unenforceable. However, banks
in those states may have to provide substitute checks with
their check-back statements.
|
| Q: |
Does this mean I won’t be getting
back my canceled checks?
|
| A: |
In some cases, you may not receive the original. If you
receive canceled checks with your monthly checking account
statements, some of the checks returned to you may actually
be substitute checks, beginning October 28, 2004.
|
| Q: |
What if I need a copy of my canceled checks?
|
| A: |
No
worries. Just contact us at (507) 357-2273 or 1-800-784-9025.
We’ll have a copy out to you quickly.
|
| Q: |
What happens to my original check?
|
| A: |
Typically, original
checks are destroyed once the check is digitized. There are
no requirements governing the retention of original checks.
Substitute checks are legal substitutes for proof of payment.
|
| Q: |
What if there’s an error involving
substitute checks?
|
| A: |
Check 21 requires
that we provisionally recredit your consumer account, usually
within ten business days, for any substitute check you receive
and dispute. Please review your monthly checking account
statements and contact us immediately if you suspect an error.
|
| Q: |
What are the implications for my account
management practices.
|
| A: |
Checks you write
should clear sooner, raising your responsibility to insure
that adequate funds are in the account you are writing checks
from. To avoid the possibility of having your checks returned
NSF you should not write checks for amounts that can’t
be covered by funds already in your checking accounts.
|
| Q: |
Can I still use my checkbook checks?
|
| A: |
By all means. Check 21 does not mandate
electronic check processing; it just makes it easier. |
