Consumers need to know about Check 21

By Roger M. Beverage

President and CEO

Oklahoma Bankers Association

As you may know, a new federal law known as “Check 21” will go into effect next week, affecting all financial institution customers. There seem to be a lot of misperceptions about this law, the intent of which was to bring check processing into the 21 st Century. (Ironically, that's how the law got its nickname.)

Very little will change on October 28, the date this law goes into effect. But the one thing that will change – and of which consumers should be acutely aware – is that Check 21 means their checks will be processed faster and more efficiently.

Check 21 came about as a result of the events of 9/11/2001. Its purpose is to speed digital images through the Federal Reserve's processing sequence. Over time, it will dramatically reduce the time, risks and costs associated with paper check processing.

Perhaps most importantly, Check 21 will eliminate delays and risks of physically transporting checks, thus creating a more efficient check processing system, without changing the way consumers write checks. It simply requires banks and consumers to accept paper copies of their original checks. These legal copies are known as “substitute checks.”

Although Check 21 will eventually eliminate “float” it also provides a number of benefits for consumers by:

§ Posting deposits faster , including those made after hours at ATMs .

§ Reducing clutter . No longer do people have to store canceled checks at home; proof of payment can be accessed electronically. Consumers who still prefer to receive copies of canceled checks may contact their bank.

§ Faster error resolution and reduced potential for clerical errors.

§ Improved access to check information both online and via ATMs.

When Check 21 goes into effect next week, it will not be like a switch has been flipped and suddenly we will have converted to a substitute check environment. Changes mandated by the new law will be gradual over the course of several years. Check 21 does not require banks to send or accept checks electronically, and many will not do so for a long time after Check 21 takes effect.

Consumers should, of course, be certain when they write a check that they have available funds in their accounts — but this is nothing new. Having funds on hand when a check is written has always been required. Simply stated, if the money's not in the account, don't write the check.

In the past, what has varied is the manner in which this age-old requirement has been enforced. Since Check 21 means that a check written may go through immediately, it necessarily means that the “float” time between when a check is written and when it is presented for payment is virtually eliminated, and this is what consumers will find is different.

Consumers should not rely on “float.” Most banks and some other financial institutions will allow consumers to withdraw funds on the day of deposit, or the day after, but if consumers want paychecks to be available in their accounts even more quickly, we encourage them to have their paychecks deposited directly by their employer. It's easy, faster and less likely to create problems if it's done this way.

Remember, at one time consumers received credit card receipts with their card statements. They were gradually phased out with little notice or consequence. We expect the same thing will happen with Check 21 and it will end up being a non-event.

Many consumers will notice little if any change in their bank statements. In fact, the vast majority of bank consumers today do not receive their original canceled checks . These consumers are accustomed to and comfortable with images.


The IRS, courts, merchants, landlords and others have accepted copies and images of checks as proof of payment for decades, so consumers need not be concerned about not receiving their original checks. If they need a copy of their check, they can get one from their bank.

In addition, consumers still receive the same protections against unauthorized, erroneous or fraudulent check payments, regardless of whether they have the original paper check, a substitute check, a check image or an account statement with a description of a paid check. In general, if a consumer did not authorize a check transaction, the consumer is not liable and gets the amount of the check re-credited or refunded to their account.

Banks have been sending notices to their customers about this law. If you have questions about Check 21, you can read more information on the OBA's Web site,, contact your bank or feel free to contact the Oklahoma Bankers Association.

Boise City News, P.O. Box 278
105 W. Main Street
Boise City, Oklahoma 73933-0278
Phone: 580 544-2222
Fax: 580 544-3281
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