I see from my mail that lots of folks have questions and comments about a federal law that will take effect Oct. 28.
The Check Clearing for the 21st Century Act, or Check 21, is supposed to make check processing faster and more efficient because it allows banks to replace paper checks with legal substitute checks that are made from digital images of the originals.
Sounds simple, right?
The problem is that the law doesn't demand that banks do the digital thing -- it just says they're allowed to. So basically, banks can do whatever they want, and you won't have a choice except to switch to another bank if you're not happy with how yours handles your checks.
So what are the banks' options?
Well, after Oct. 28, Bank A could say it won't be sending original canceled checks back to you anymore. Instead, you'll get digital images, which is what many banks already do and will continue to do under Check 21.
Bank B might inform customers that it has decided to continue sending back canceled paper checks.
Bank C might do a combination of the above -- send some original canceled checks, some copies and some "substitute checks," which are paper copies of the front and back of the original check with all the endorsements.
And why the mix, you might ask?
Under Check 21, your original check may pass through a bank in the check-processing chain and be converted to a digital image, points out Gail Hillebrand, senior attorney for Consumers Union. It's possible that you could write a check to someone and that person's bank might replace your check with either a digital image or a substitute check, which all banks must accept as if it were the original, Hillebrand said.
