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Check 21
What is Check 21?
On October 28, 2003, President Bush signed into law The Check Clearing Act for the 21st Century, which goes into effect October 28, 2004. The Act, popularly known as Check 21, will streamline the check-clearing process, making it faster and more secure.
Instead of physically moving paper checks from one financial institution to another, Check 21 will allow banks and credit unions to create an electronic image of the check and then process the check electronically. This will significantly reduce the amount of time it takes to move money out of an account and pay recipients of a check. Checks will clear faster, reducing the amount of float time.
What changes will I notice with Check 21?
The biggest change you will notice is that your checks will clear your account faster. Check 21 eliminates the time it takes to physically move a check from one institution to another, commonly referred to as "float time." Your check will be processed electronically and will reach your bank or credit union sooner. The time it takes for a check to clear your account once it reaches your financial institution is reduced from days to hours. Make sure you have funds available in your account to cover the checks you write.
Another change with Check 21 is the elimination of canceled checks returned to you. Although EECU does not return canceled checks, other institutions do. With Check 21 you may receive a substitute check instead of your original paper check.
What is a substitute check?
When the financial institution receives your paper check, it creates an electronic image of the front and back of the check; the paper check can then be destroyed. If you require a copy of a check you may receive a substitute check, which is printed using the electronic images of the original paper check (front and back) with additional endorsements, such as the reconverting banks, bank of first deposit, and truncating bank routing number and legal note (see sample below).
Is a substitute check legally the same as an 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. The front of the substitute check states: "This is a legal copy of your check. You can use it the same way you would use the original check."
What if I need a copy of a check?
When you need a copy of an EECU check that you wrote to someone else, you will still be able to use Online Access Home Banking to view and print copies of checks, or we will produce check copies for you. Photocopies of the front and back of your paid check should be proof of payment in most situations.
If you receive a substitute check from EECU or any other financial institution, you will also receive information about your rights under Check 21 if you should suffer a loss as a result of a substitute check that was not properly charged to your account.
Your Rights Under Check 21
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 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 a dividend-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 dividends, if your account earns dividends) within 10 business days after we received your claim and the remainder of your refund (plus dividends if your account earns dividends) not later than 45 calendar days after we received your claim.
We may reverse the refund (including any dividends 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 Monday thru Friday at 559-437-7700 or toll free at 1-800-538-EECU (3328). You must contact us within 40 calendar days of the date that we mailed 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 be in writing and must include:
- A description of why you think 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
- A copy of the substitute check and/or the following information to help us identify the substitute check. (example, the check number, date written, amount of check, and the name of the person the check was written to)
- Include your account number and sign the letter.
