Check 21

Check 21 is the new law that allows credit unions, banks and processors to “truncate” checks earlier in the check clearing process. It also allows all US financial institutions to start the process of substituting paper checks with electronic checks at any point during the check collection process.

Substitute Checks and Your Rights

Some or all of the checks that you receive with your account statement or by request may look different than the checks you wrote. To make check processing easier, a federal law permits banks to replace original checks with “substitute checks.” This notice describes substitute checks and the rights that you will have when you receive substitute checks.

A substitute check is the legal equivalent of an original check for all purposes, including proof of payment, if it includes an accurate copy of the front and back of the original check and contains the words, “This is a legal copy of your check. You can use it the same way you would use the original check.” A substitute check that meets these requirements is generally subject to state and federal laws that apply to the original check. If you lose money because you received a substitute check, you have the right to file a claim for an expedited refund.

example of substitute check
Example of a substitute check

Your Right to File a Claim for an Expedited Refund

Federal law gives you the right to file a claim for an expedited refund if you receive a substitute check and believe that all of the statements below are true:

  1. The substitute check was incorrectly charged to your account (for example, if we charged your account for the wrong amount)
  2. You lost money as a result of the substitute check charge to your account; and
  3. You need the original check or a better copy of the original check to demonstrate that we incorrectly charged your account (for example, this may be true if you think that we charged your account for the wrong amount and the substitute check does not clearly show the amount).

Expedited Refunds

To obtain an expedited refund, you must send us a claim. Federal law limits an expedited refund to the amount of your loss, up to the amount of the substitute check, plus dividends if your account earns dividends. You should be aware that you could be entitled to additional amounts under other state and federal laws.

How to Make a Claim for an Expedited Refund

Make your claim by contacting us through any of these methods:

  • Telephone: 415.674.4800 or toll-free at 1.888.499.FIRE (3473)
  • Writing: 3201 California Street, San Francisco, CA 94118

You must make your claim within 40 calendar days of the latter of these two dates:

  1. The date that we delivered the account statement showing the charge that your are disputing; or
  2. The date on which we made the substitute check available to you.

Your expedited refund claim must:

  1. Describe why you think the charge to your account was incorrect.
  2. Estimate how much money you have lost because of the substitute check charge;
  3. Explain why the substitute check is not sufficient to show whether or not the charge to your account was correct; and
  4. Provide us with a copy of the substitute check or give us information that will help us to identify the substitute check and investigate your claim (for example, check number, name of person to whom the check is made payable and the amount of the check).

Our Responsibilities for Handling Your Claim

We will investigate your claim promptly. If we conclude that we incorrectly charged your account, we will refund your account the amount of your claim (up to the amount of the substitute check, plus dividends if your account earns dividends) within one business day of making that decision. If we conclude that we correctly charged your account, we will send you a notice that explains the reason for our decision and include either the original check or a better copy of the original check than the one you already received. If we have not made a decision on your claim within 10 business days after you submitted it, we will refund the amount that we owe to your account, up to $2,500, plus dividends, by that date. We will refund the remaining amount, plus interest, to your account by the 25th calendar day after you submitted your claim.

If we refund your account, on the next business day we will send you a notice that tells you the amount of your refund and the date on which you may withdraw that amount. Normally, you may withdraw your refund on the business day after we make it. In limited cases, we may delay your ability to withdraw up to the first $2,500 of the refund until the earlier of these two dates: (1) the day after we determine that your claim is valid; or (2) the 45th calendar day after the day that you submitted your claim.

Reversal of Refund

We may reverse any refund that we have given you if we later determine that the substitute check was correctly charged to your account. We may also reverse any dividends we have paid you on that amount if your account earns dividends. Within one business day after we reverse a refund, we will send you the original check or a better copy of the original check than the one you previously received, explain to you why the substitute check was correctly charged to your account, and tell you the amount and date of the reversal.