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Check 21: Substitute Checks and Your Rights

In 2003, Congress passed the Check 21 Act to prevent disruptions to the process of check collection in the United States. The purpose of the law is to permit collecting banks to transmit checks for payment electronically rather than physically.

As more and more banks take advantage of the law, fewer and fewer checks written by customers of Dollar Bank will ever be received by us: the bank where the check is deposited will send us only an electronic image. One result may be that checks you write may be presented for payment faster than before. Another result may be that checks you deposit may be collected faster than before. A final result will be that in more and more cases, we will receive only an image of the check that you wrote, not the original check itself.

Substitute Checks

As part of the Check 21 Act, Congress authorized a new type of instrument called a “substitute check.” Instead of an image of your original check, we may also receive one of these substitute checks. This is a slightly reduced copy of the front and back of the original check with a special legal notice indicating that it is a “legal copy.” A substitute check is the full equivalent of an ordinary check for all purposes of law.

Right of Recredit

If we pay on the basis of a substitute check or an image of a check, you have all the rights that you would have if we paid on the basis of the original check itself. In addition, you have an extra right. This right applies ONLY if you believe in good faith that 1) we improperly paid an item or you suffered a loss (for example we paid it twice,) AND 2) a substitute check or image is insufficient to confirm the improper payment or loss. If this is the case, you may request that the bank recredit your account for the amount of your loss. In addition, if payment of the item caused the account from which it was paid to be assessed any fees or to receive less interest than otherwise due, you may also request that such fees or interest, if any, be recredited to the account as well.

Time Limit

Except under extraordinary circumstances, you must make your request for recredit within forty (40) calendar days after the date that we mail you the periodic statement that shows the payment being questioned. IT IS IMPORTANT FOR YOU TO REVIEW YOUR STATEMENT AND TO MAKE YOUR REQUEST FOR RECREDIT PROMPTLY TO PRESERVE YOUR RIGHTS.

Procedure for Making a Request for Recredit

Call Dollar Bank Account Security at (800) 535-2557 to get your request on record promptly. This is a recorded line so the time and date of your call will be recorded automatically. Account Security will ask you some questions to ensure that we know precisely what item you are questioning. They may ask you as well to fill out and sign a form, to have it notarized, and to return the notarized form to us. That is all you have to do. Recredits will be processed within ten (10) business days except for amounts in excess of $2,500, which may take as long as forty-five (45) calendar days.

Understanding a Substitute Check

Now that the act is in place you may begin to see some substitute checks in your monthly statement or in Online Banking. A substitute check is the full equivalent of an ordinary check for all purposes.

View Example Substitute Check »

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