About Check 21 Legislation

Check 21 (The Check Clearing for the 21st Century Act) is a new federal law which will go into effect October 28, 2004. It is a means of streamlining the nation’s check processing system. Check 21 is intended to reduce the time and cost associated with the physical transportation of paper checks between banks. It will also reduce the vulnerability of the check payment system from disruptions due to extreme weather or natural disasters. United Security Bank has prepared the following to inform our customers about this new law. If you have any further questions, please contact your local branch.

What is Check 21?
Check 21 allows all banks to replace the original check with a paper reproduction (front and back). This copy is called a substitute check and is created from a digital image of the original The digital image contains the same information, and becomes the legal equivalent of the original check.

How does Check 21 change the way I write or accept checks?
No. You will continue to use your current paper checks and accept paper checks from others.

If Check 21 accelerates the processing time, how does it affect the amount of time between the writing and cashing of a check?
Check 21 will result in a reduction in “float time,” the time between the cashing and clearing of a check. If you rely on “float” time you will need to be careful to avoid being overdrawn. One way to better control the risk of overdraft is to view your daily activity through our online banking service. Your branch can assist you with setting up your internet access.

Why create paper substitute checks?
Yes, substitute checks are paper. However, they generally don’t have to be transported between banks as is the case with the current check processing system. Currently the transportation of checks can be disrupted by weather conditions or any disaster that may disrupt the transportation systems of our country. Substitute checks, on the other hand, are created from digital images.. Banks can exchange these digital images electronically, reducing reliance on physical transportation. The digital images can be converted to substitute checks if a substitute check is needed for any reason.

What happens if there is a discrepancy and I need to show a copy of a check?
In the event of a discrepancy, retailers and service providers, including financial institutions, are required to accept the substitute check as proof of payment. The substitute check is the legal equivalent of the original. You can request a substitute from your branch.

If I normally receive returned checks with my statement, what will I now get back with my statement under Check 21?
If you currently receive your checks back in your statement you will begin to receive images. You may receive a mixture of original and substitute checks.

If I now receive check images with my statement, what effect will Check 21 have on my statements?
You will continue to receive images of processed checks just as you do today. However, you may begin to notice a combination of original and substitute check images on your image statement.

What happens if I have a truncated account?
For those of you who have truncated statements you will be able to obtain a copy of your check just as you have in the past. You may contact your branch for more information.

What happens to my original checks?
Once a digital image is created, your original check is taken out of the check collection process. The digital image will be used if a substitute check is needed. The original checks are destroyed.

Are there any exceptions to Check 21?
No, once Check 21 legislation goes into effect in October 2004, it will apply to all bank customers, with no exceptions.

Will Check 21 reduce the risk of fraud?
With the original check is physically taken out of circulation, and the enhanced security of electronic channels better limits contact with your financial information. Also, electronic processing between financial institutions reduces the time between the check being written and cancelled, so customers should be able to detect forged, altered or unauthorized items sooner.