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Your returned checks may start to look different.
A Federal law permits financial institutions to replace an original check with a “substitute check.” It’s called the Check Clearing for the 21st Century Act, known by most as Check 21.
A “substitute check” is a paper reproduction of an original check. It contains an image of the front and back of the original check – including the signature – and any endorsements. A “substitute check” is the legal equivalent of the original check, and it bears a legend stating that fact.
Why the change?
Check 21 is designed to streamline check processing between financial institutions. A major driving force behind the change were the events of September 11, 2001, when grounded flights stopped the flow of checks – and hampered processing – for days.
With more than 40 million paper checks processed each day, Check 21 is intended to help ensure more reliable and efficient check processing.
How does it work?
A financial institution receiving a paper check as a deposit or payment, will now be permitted to scan that check and send the information electronically through the banking system. In the past, the actual paper check had to move through the system.
If an original check has been transmitted electronically we will include an image of the “substitute check” in your statement.
As you receive “substitute checks” please keep in mind that we did not send any information electronically. Your check was converted to an image, and we received that image as a “substitute check.” When we receive a “substitute check” drawn on your account, we treat it just like a normal paper check.
How will this impact me?
The biggest impact on checking customers will be the speed at which your checks will move through the banking system.
Conveying checks electronically reduces the time it takes for a check you write to someone, for example, on the West Coast (or anywhere else in the country) to be returned to us from days to hours. This potentially eliminates “float” time, making it critical to make sure funds are available in your account to cover checks when you write them.
What are my rights regarding substitute checks?
Please refer to the Substitute Checks and Your Rights Disclosure below.
IMPORTANT INFORMATION ABOUT YOUR CHECKING ACCOUNT
Substitute Checks and Your Rights
What is a substitute check?
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.
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 laws with respect to those transactions.
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 508-528-0088 or PO Box 307, Franklin, MA 02038. You must contact us within 40 calendar days of the date 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 written claim must include –
- Your name and the subject account number;
- 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 and/or the following information to help us identify the substitute check: Check number, the name of the person or entity to whom the check was made payable and the amount of the substitute check.
How can I learn more about Check 21?
You can learn more by visiting the Massachusetts Bankers Association web site at: www.massbankers.org.
Meanwhile, should you have any questions, please feel free to call us at 508-528-0088 or stop by any of our offices.
Tell us…What do you see?
For more information on any of our products and services, to provide us with your comments or feedback, or simply to tell us about your own dreams and visions so that we can help you get there, please use our information request form, or call any of our offices.
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