Check 21

Questions and Answers You Should Know ...

When you request a copy of a check we paid, it may look different than the check you wrote. To streamline check processing, a new federal law called "Check 21" permits institutions to replace original checks with "substitute checks."

What is Check 21?

Check 21 Act is legislation that allows financial institutions to substitute a machine-readable copy of a check (“a substitute check”) for the original check for collection or return. This allows financial institutions to process checks electronically rather than by transporting them via truck, train, or airplane. Substitute checks that meet the requirements of the Act will be the legal and the practical equivalent of the original check.

Why was Check 21 created?

Check 21 was created to reduce the time, risks, and costs associated with paper check processing and transportation. Traditionally, financial institutions rely on physical transportation to deliver checks between financial institutions for payment. Check 21 allows original paper checks to be removed from the collection process and be replaced with substitute checks created from digital image files. Financial institutions can send check images electronically, reducing dependence on transportation that can be impacted by uncontrollable delays, such as weather or natural disasters.

What does Check 21 do?

Check 21 streamlines and improves check processing without requiring members to change the way they write checks. It simply requires financial institutions and members to accept paper reproductions of original checks. These reproductions are called substitute checks.

What is a substitute check?

A substitute check is a copy of an original check that is the same as the original check for all purposes, including proving that you made a payment, if it includes an accurate copy of the front and back of the original check and contains the words: “This is a legal copy of your check. You can use it the same way you would use the original check.” A substitute check that meets these requirements is generally subject to federal and state laws that apply to an original check.

Why will Check 21 reduce float?

Check 21 is designed to encourage electronic collection of checks. By eliminating the need to physically transport checks between institutions (sometimes across the country), Check 21 will reduce the time it takes for a check to get from the institution where it was deposited to the institution that will pay it.

Does Check 21 affect my right to be sure my account is correctly charged?

Check 21 does not reduce the rights you have under current law to be sure that your account is only charged for items you have authorized. Check 21 ensures that your account will only be charged for checks that you have actually written. It provides you with specific rights and claims if a substitute check is improperly charged against your account.

Do I have to accept substitute checks as proof of payment?

Yes. Once a paper check is converted into a substitute check, it becomes the legal equivalent of the original paper check. Any financial institution may accept them as if they were the original checks.

Which checks are eligible to become substitute checks?

All checks, except foreign checks, are eligible for conversion to a substitute check including, but not limited to, consumer checks and money orders.

What happens to my original check?

There are no requirements governing the retention of original checks by the financial institution that converts the item into a substitute check. Original checks will most likely be destroyed after a short period of time by the financial institution originating the substitute check. A substitute check made from the digital image becomes the legal substitute for proof of payment.

What do I do if a merchant or other party needs a copy of my check?

A substitute check is the same as the original check for all legal purposes under state and federal law. If you need to provide a copy of a paid check to anyone, a copy of the substitute check will be satisfactory.