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Check 21 - Frequently Asked Questions
I recently heard that something called Check 21 will change how I receive cancelled check images with my bank statements. What is
Check 21?
What is the purpose of the law and why is it being implemented?
I’ve just heard about Check 21, what is Nantucket Bank doing?
Are there any charges associated with Check 21?
Do I have a choice whether or not to receive substitute checks?
Will I receive my original check image back with my statement?
Isn’t it a Massachusetts state law that I am supposed to get my checks back?
If I want my originals back even though a substitute check was issued, how can I get them?
Who do I contact for a copy of my check?
What happens to my original check?
Why is the original check destroyed?
What if the original check is not destroyed and my account is charged twice?
I get imaged checks copies now with my image statement. Will I continue to receive these images?
When will the funds be debited from my deposit account?
As a result of Check 21 will my checks clear my account faster?
What about the collection time of my deposits? Won’t I collect on those faster as well?
How does Check 21 differ from an electronic check conversion
(ACH – Automated Clearing House)?
What’s the difference between Check Imaging/Image Statement and
Check 21?
If a check I deposit is returned to me in the form of a substitute check, what can I do with it?
If you have any additional questions about Check 21, please contact
Nantucket Bank at 1-800-533-9313.
I recently heard that something called Check 21 will change how I receive cancelled check images with my bank statements. What is Check 21?
Check 21 is new Federal legislation that takes effect on October 28, 2004. Check 21 permits banks to use a new type of negotiable item called a "substitute check."
What is the purpose of the law and why is it being implemented?
Check 21 was created to improve efficiency in the US banking system. It allows banks to exchange check images electronically, reducing the need to transport paper checks for presentment between banks. In the event of a natural disaster or terrorism, the check exchange process can continue more efficiently.
I've just heard about Check 21, what is Nantucket Bank doing?
We are evaluating the impact of the Check 21 regulation and we will be providing communications to all our customers starting in August with an insert in your account statement. You will also receive a brochure in your October activity statement.
A substitute check is a paper reproduction of an original check. It contains an image (both the front and back) of the original check. It is the legal equivalent of the original check provided it accurately represents the original item and contains the following legend. "This is a legal copy of your check. You can use it the same way you would use the original check."
Are there any charges associated with Check 21?
No. At the current time, no fees will be assessed for the use of substitute checks.
Do I have a choice whether or not to receive substitute checks?
No. This is a Federal Law and as of October 28th all banks are required to accept substitute checks. It is Nantucket Bank's practice to comply with all federal laws.
Will I receive my original check image back with my statement?
Not all checks you write will be transformed into substitute checks. However, if a substitute check is created you won't see the original check again. You will begin to notice a combination of original checks and substitute check images with your statements. Your account statement will not be affected—all checks will continue to be listed on your statement in the same manner as they are today.
Isn't it a Massachusetts state law that I am supposed to get my checks back?
Check 21 supercedes state law, and the Federal law stipulates that either an original check or a substitute check image may be returned to the customer.
If I want my originals back even though a substitute check was issued, how can I get them?
Once Check 21 is in effect, you may not always be able to have your original checks returned to you. This change is due to the fact that we may not receive the cancelled check from the bank of deposit. The original check is destroyed. It is not possible to retrieve an original check if a substitute check has been created. Remember, the substitute check is the legal equivalent of the original check.
If I do not receive my original check back and I need to provide an original copy of the check as proof of payment, how can I do this?
You may request a copy of a check or a substitute check if the original check or substitute check is unavailable. You will receive a "photo in lieu," which is a photocopy of the check that is certified to be a legal equivalent.
Who do I contact for a copy of my check?
You may contact any Nantucket Bank branch or the Call Center to request a copy of the substitute or copy of the original check, if available.
What happens to my original check?
The entity that truncated the original check is responsible for destroying the original check to ensure that your account will not be charged twice for the same check.
Why is the original check destroyed?
The image of the check contains all the information needed to process the check. The original check is destroyed to prevent the item from posting twice.
What if the original check is not destroyed and my account is charged twice?
The entity that creates the substitute check guarantees that the original check will not be processed. In the unlikely event that your account is charged twice, you will be able to submit a claim. Nantucket Bank will be providing detailed information to our customers in the October activity statements.
I get imaged checks copies now with my image statement. Will I continue to receive these images?
Yes, you will continue to receive imaged checks with your image statement as you currently do.
What happens if the original check is destroyed and then the substitute image is also lost (e.g. computer malfunction)?
We would follow the same process as today when a check is lost or destroyed in the check collection system. You may request a copy of the check and you will receive a "photo in lieu," which is a photocopy of the check that is certified to be a legal equivalent.
When will the funds be debited from my deposit account?
Upon receipt of the check, original or substitute, just as is currently the process today. However, if a substitute check has been created from the check you issued, the check clearing process might be expedited so the debit could happen faster than for a paper check.
As a result of Check 21 will my checks clear my account faster?
Probably, as increasing numbers of banks participate in image exchange, faster check clearing times will occur. It will become increasingly important for you to closely monitor your account balance in order to avoid unexpected overdrafts and related charges.
What about the collection time of my deposits? Won't I collect on those faster as well?
Nantucket Bank continuously reviews check clearing times and the impact on our Funds Availability policy. In addition the Federal Reserve Bank reviews check clearing times and the impact on Regulation CC - Expedited Funds Availability Act. The Federal Reserve Bank has stated the "Funds Availability" section of Regulation CC will be revised 30 months from October 28, 2004. This change is expected since the Fed anticipates the majority of financial institutions will be fully participating in image exchange by that time. Image exchange by nature of its process results in faster check clearing times.
How does Check 21 differ from an electronic check conversion (ACH - Automated Clearing House)?
An electronic check conversion is processed through the Automated Clearing House (ACH). The electronic image of the check is not printed or converted to a substitute check. The entire process is accomplished electronically.
When a customer presents a check to a merchant, the merchant may return the check to the customer and send the transaction through ACH. The customer can then void the check and the transaction will appear on the customer's statement with a code indicating this transaction was processed through ACH.
What's the difference between Check Imaging/Image Statement and Check 21?
With Check Imaging, Nantucket Bank receives the original check back from the processing bank through its check processor. Instead of returning the original check, an image of the check is provided in the customer's account statement.
Check 21 is a Federal Law designed to improve the national check collection system. With Check 21, it is possible that the bank may receive a substitute check instead of the original check. All banks must comply with this new law.
If a check I deposit is returned to me in the form of a substitute check, what can I do with it?
Since a substitute check is the legal equivalent of the original paper check, the next steps are the same as if you receive a return deposited item today. So, depending on the reason for the return, you may be able to:
- Redeposit the substitute check into your account
- Cash it a branch or paying bank
- Follow-up directly with the maker of the check
I heard there are recredit rights for consumers. What does a business in the case of a discrepancy with a substitute check?
Businesses are subject to the standard industry recredit policies, procedures and timeframes currently in place.
Can I capture images of the checks I receive at my place of business and transmit them to Nantucket Bank for collection?
Not at this time. However, we are exploring options that enable business customers to scan checks received for payment, then transmit image files to our bank for processing. Since this technology is very new, there is much research necessary to find the most secure and economical product offering. We will let you know when we may be able to offer business customers an on-site image capture product.
The implementation date for Check 21 is October 28, 2004.
If you have any additional questions about Check 21, please contact
Nantucket Bank at1-800-533-9313.