New Check Law

"Greg Butler" writes:

Right, what I was talking about was the new law that makes an electronic
copy of the check just as legal as the original, thus eliminating the need
for delivery of cancelled checks.

You're referring to "CHECK21", the short name for the legislation formally
titled "Check Clearing for the 21st Century Act". As noted elsewhere in
this thread the main impact of this act is to allow a paper check to be
converted to an electronic image at any point in its travel within the
banking system.

Unfortunately, what you (as the customer of your bank) receive with
your monthly statement isn't necessarily as good as a real, paper
check. Some banks are returning to you documents formally called
"substitute checks", but others are merely giving you images that have
little legal significance if you have a dispute.

It's easy to tell the difference. The law is specific about a document
described as a "subsitute check":

* It must accurately represent all of the information on the front
and back of the original check as of the time the original
check was "truncated" (i.e., converted to an image)
[section 4(b)(1)(2003) of the Check21 Act]

* It must contain a legend stating "This is a legal copy of your
check. You can use it the same way you would use the original
check" [section 4(b)(2)]

As far as I can tell, an image that is not a substitute check has no
intrinsic legal standing, although I would expect that for typical
routine transactions a merchant would probably want to accept such
an image as proof as long as there is no suggestion of fraud.

Banks that don't routinely provide you with substitute checks can charge
you whatever they want should you need one.

What's more, the banks are required to retain the images for only
seven years, and can (and probably will) destroy the files after
that time. There is no requirement that they have any mechanism
to obtain substitute checks after that point, regardless of the
customer's need to prove a payment, nor any requirement that the
customer be able to bulk-download the images.

Good references:

http://www.consumerlaw.org/initiativ...1_content.html
http://www.consumersunion.org/finance/ckclear1002.htm

Joe Morris