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Understanding Check 21

Frequently Asked Questions:

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What is Check 21?
Enacted by Congress on October 28, 2004, Check 21 is a Federal Law which facilitates efficiency improvements to the nation’s check processing system. It allows financial institutions to create a new legal document called a “substitute check” in place of the actual original document.
Why do we need it?
Check 21 decreases processing time, risk, and transportation costs. It also reduces the likelihood checks will be delayed, destroyed, or lost in processing. Error resolution and fraud detection is expedited.
How will I realize Check 21 is working?
As a result of Check 21, you may notice a reduction in float time and/or replacement of your original checks with copies of checks – the “substitute check.” The most noticeable change may be a reduction in the delay from the time you write your check to the time it clears your account. If you receive checks or images you may also notice your original check has been replaced with a legal copy.
What action is required by me?
None is required, but we recommend writing clearly with black ink pens only. Check 21 readiness and compliance is handled by the government and financial institutions. As mentioned, however, float time will be reduced. This could pose a greater risk of some checks being returned NSF if funds are not available to cover the check at the time it is written. We offer Ready Reserve for overdraft protection. Contact us for more details.
Are only consumers affected by Check 21?
No. Check 21 impacts all customers and applies to all domestic checks and deposit accounts. Some provisions are exclusive to consumers, such as expedited recredit.
Does Check 21 preempt state laws?
Yes. Check 21 supersedes any state law, including provisions of the UCC or state laws that are inconsistent with this federally mandated law. Hence, state laws are unenforceable in regard to provisions that customers receive paid original checks back with their statements. There is also no opportunity to opt-out. Substitute checks are legal equivalents of the original and neither a consumer nor a bank may refuse to accept the legal substitute.
What is a truncated check?
The original physical document that was digitally imaged, then removed from the check collection and return system and replaced with a legal substitute.
What checks are eligible to be truncated and subsequently become “substitute checks?"
All checks, with the exception of foreign checks, are eligible for replacement with substitute checks. In addition, Check 21 does not apply to savings bonds as they are not checks. It will apply to consumer and business checks, money orders, controlled disbursements, traveler’s checks, and all government checks including Treasury checks and state warrants.
What is a substitute check?
Substitute checks are paper copies created from electronic images of original paper checks (front and back, with all endorsements). A substitute check is a legally sanctioned document and both federal and state laws apply to it, just as if it were the original. Consumers also have all rights and obligations given the original physical document including using it as proof of payment and expedited credit.
What will a substitute check include?

A substitute check will contain the following:

  • A message stating it is a legal copy.
  • A reproduction of the front and back including all endorsements.
  • All the same information contained in the original check.
  • ID of the bank that truncated the check and produced the paper substitute check.
What does a substitute check look like?
Click here to see an example.
What if I need a copy of my canceled check?
First National Bank of Milaca will send you a copy of whichever legal document we have on record. This may be a copy of the original, the actual original check, or a legal substitute. Fees may apply.
Do check images in my image statement constitute substitute checks?
No. Images must meet the substitute check requirements to qualify.
Will I be able to obtain my original, but now truncated checks? What happens to them?
You may not always be able to obtain the original physical document. You will, however, be able to receive a copy of the legal document we have on record, be it the original or a substitute. The institution responsible for truncating the check into a digital substitute check may destroy the physical original at will. Thus, it may not always be feasible to obtain the original document.
Can substitute checks be proof of payment or facilitate the correction of a posting error?
Yes. Substitute checks afford all the same legal provisions and legal recourse of the original document.
What if there's an error resulting from a check that is converted to a substitute check?
Check 21 provides provisions allowing consumers to file claims to obtain an expedited re-credit for certain losses pertaining to substitute checks. This provision is consumer based and may not apply to original checks or electronic debits. Those have rights under other existing laws.
How does a consumer file a claim for an expedited re-credit?
Contact us immediately. It is very important to file the claim quickly. The provisions include statutory limitations that are time sensitive. The sooner you contact First National Bank of Milaca, the better your chances of a successful re-credit. Also, the following statements must apply:

Recredit Eligibility Requirements
1 The substitute check is incorrectly charged to the consumer's account. This could occur if a bank charges an account for the wrong amount or if the same check is double processed.
2 The consumer suffers a monetary loss as a result of the substitute check charged to his or her account.
3 The consumer needs the original check or a better copy of the original check to demonstrate the account is incorrectly charged. This could occur if the consumer believes they’ve been incorrectly charged and the substitute check doesn’t clearly show the amount. (This is why we recommend only black ink pens)
How much is a consumer entitled to receive in an expedited re-credit?
Federal law limits an expedited re-credit to the amount of the consumer's loss, up to the amount of the substitute check plus interest if applicable. Losses in excess of the amount of the substitute check may be recovered under other federal or state laws.
How does a consumer make a claim for an expedited recredit?
By contacting us. Please note, we may require claims be submitted in writing signed and dated. We must receive notice within 40 calendar days of the date we mailed (or otherwise delivered by a means to which the consumer agreed) the substitute check in question or the account statement showing that the substitute check was posted to the account, whichever is later. We may extend this time if the consumer was not able to make a timely claim because of extraordinary circumstances. The re-credit claim must include the following:
Recredit Claim Requirements
1 A description of why the consumer has suffered a loss (for example, if the consumer thinks the amount withdrawn was incorrect.
2 An estimate of the amount of the loss.

An explanation of why the substitute check is not sufficient to show whether or not the consumer suffered a loss.


A copy of the substitute check and/or the following information to help us identify the substitute check: the check number, the name of the person to whom the check was written and the amount of the check.

What is FNBM's responsibility for handling an expedited recredit claim?
All claims will be investigated promptly. If we find an account has been incorrectly charged, we will re-credit the account according to provisions mandated by law. However, we may reverse the refund (including interest) if we are able to later demonstrate the substitute check posted correctly. However, if we conclude the account has been charged correctly, we will notify the consumer explaining our decision including either a better copy or the original check itself.

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