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Check 21 - A More Efficient Way to Process Checks
The Check Clearing for the 21st Century Act, commonly referred to as Check 21, is a federal law that became effective on October 28, 2004. Check 21 was enacted to streamline the nation's check processing system by reducing the physical transportation of paper checks between banks.
What is CHECK 21?
Essentially, Check 21 allows banks to create a "substitute check" from an electronic image of the original check. This allows banks to process checks electronically rather than by transporting them via truck, train or airplane.
Why was CHECK 21 created?
Congress enacted Check 21 in order to make the nation's check processing system more efficient. Allowing the electronic movement of checks (i.e. images) results in the following benefits:
- Reduces the inability to process checks due to weather or unforeseen events
- Reduces the storing and processing of paper
- Increases the detection of fraud as checks are processed faster
What exactly is a substitute check?
A substitute check is a paper reproduction of a digital image (both front and back) of the original check. It serves as a legal equivalent of the original paper check.
What does a substitute check look like?
Here's an example of a substitute check:
Which checks are eligible to become substitute checks?
All checks, with the exception of foreign checks, are eligible for conversion to a substitute check.
Does CHECK 21 change the way I write or accept checks?
No. You can continue writing checks the same way.
What will happen to my original checks?
Once an electronic image of your check has been made, the original will be removed from circulation and destroyed.
How am I affected?
On October 28, 2004, banks were required to begin accepting substitute checks. When receiving your monthly statement, you may see images of your canceled check, which are referred to as "substitute checks", rather than the original checks.
What do I need to do?
Nothing. However, your check may clear your account faster. So, before you write a check, please make sure your account has the necessary funds.
What happens if there is an error on a substitute check?
Under Check 21, for any substitute check that you receive that is in dispute, the bank is required to recredit your account usually within 10 days. If you suspect an error upon receiving your monthly checking account statement, please contact us immediately. Additionally, you will receive a Check 21 disclosure statement.
Can I "opt out" of CHECK 21?
No. When Check 21 took effect on October 28, 2004, it applied to all clients and financial institutions, with no exceptions.
Who can I contact for more information?
Contact First Republic's Customer Care Center at 1-888-408-0288 for more information.
