The Check Clearing for the 21st Century Act - "Check 21"
- What is Check 21?
- What is a "substitute check"?
- What does a substitute check look like?
- Will substitute checks be processed faster?
- Is all of this going to make a difference on how I run my account?
- Do I have a choice to "opt out" of this new law?
- Will I be charged extra for my check to be converted into an electronic image?
- Does Check 21 apply to all check types?
- What happens to my original paper check?
- What if I need a copy of a canceled check?
- What do I do if there is an error involving a substitute check?
- What are my rights regarding substitute checks?
- How do I make a claim for a refund?
What is Check 21?
To make check processing faster, federal law permits banks to replace original checks with "substitute checks." These checks are similar in size to original checks with a slightly reduced image of the front and back of the original check. The front of a substitute check states: "This is a legal copy of your check. You can use it the same way you would use the original check." You may use a substitute check as proof of payment just like the original check.
What is a "substitute check"?
Some or all of the checks that you receive back from us may be substitute checks. This notice describes rights you have when you receive substitute checks from us. The rights in this notice do not apply to original checks or to electronic debits to your account. However, you have rights under other law with respect to those transactions.
Note: A substitute check can also be referred to as an Image Replacement Document or IRD.
What does a substitute check look like? (See Figure 1)
A substitute check is approximately 3.75 x 8.5, contains a "4" before the routing/transit number in the MICR line and includes an image of the original paper check (front and back) with additional endorsements such as the reconverting bank, bank of first deposit and truncating bank routing numbers and the legal legend: "This is a legal copy of your check. You can use it the same way you would use the original check."
Figure 1 - If an image of an original check is converted to a
substitute check in forward collection, a "4" will be placed in
position 44 (in front of the transit number) when the
substitute check is printed. Click to enlarge.
Will substitute checks be processed faster?
Due to the fact that substitute checks do not have to be physically transported like original paper checks, it is possible that this new form of electronic handling may cause your checks to be process in a more efficient manner. Therefore, your checks may post to your account faster.
Is all of this going to make a difference on how I run my account?
Yes it may. Checks may be clearing more quickly, so deposits should be made before checks are written.
Do I have a choice to "opt out" of this new law?
No. Check 21 does not allow for any financial institution or consumer to "opt out."
Will I be charged extra for my check to be converted into an electronic image?
No. There will be no additional charges to you for the electronic imaging of your check.
Does Check 21 apply to all check types?
Check 21 applies to all domestic checks such as consumer, business, travelers and Treasury checks. It does not apply to foreign checks.
What happens to my original paper check?
In most cases, original checks will be destroyed once they are converted to electronic images.
What if I need a copy of a canceled check?
To obtain a copy of the original or substitute check either contact us at 310-381-2300 or 877-254-9328, option 4 or if you are an Online Banking user, simply view your account history and click the check number of the check you need to print.
What do I do if there is an error involving a substitute check?
Contact us immediately if you suspect an error. We will then go over the specific claim submission guidelines.
What are my rights regarding substitute checks?
In certain cases, federal law provides a special procedure that allows you to request a refund for losses you suffer if a substitute check is posted to your account (for example, if you think that we withdrew the wrong amount from your account or that we withdrew money from your account more than once for the same check). The losses you may attempt to recover under this procedure may include the amount that was withdrawn from your account and fees that were charged as a result of the withdrawal (for example, bounced check fees).
The amount of your refund under this procedure is limited to the amount of your loss or the amount of the substitute check, whichever is less. You also are entitled to interest on the amount of your refund if your account is an interest-bearing account. If your loss exceeds the amount of the substitute check, you may be able to recover additional amounts under other law.
If you use this procedure, you may receive up to $2,500 of your refund (plus interest if your account earns interest) within 10 business days after we received your claim and the remainder of your refund (plus interest if your account earns interest) not later than 45 calendar days after we received your claim.
We may reverse the refund (including any interest on the refund) if we later are able to demonstrate that the substitute check was correctly posted to your account.
How do I make a claim for a refund?
If you believe that you have suffered a loss relating to a substitute check that you received and that was posted to your account, please contact us at 310-381-2300 or 877-254-9328, option 4, or email us. You must contact us within 40 calendar days of the date that we mailed (or otherwise delivered by a means to which you agreed) the substitute check in question or the account statement showing that the substitute check was posted to your account, whichever is later. We will extend this time period if you were not able to make a timely claim because of extraordinary circumstances.
Your claim must include:
- A description of why you have suffered a loss (for example, you think the amount withdrawn was incorrect);
- An estimate of the amount of your loss;
- An explanation of why the substitute check you received is insufficient to confirm that you suffered a loss; and
- A copy of the substitute check or the following information to help us identify the substitute check: the check number, the name of the person to whom you wrote the check, and the amount of the check.
