What is Check 21?
The Check Clearing for the 21st Century Act, commonly known as Check 21, is a new federal law that becomes effective on October 28, 2004. It was designed to foster innovation in the country's check clearing system and improve the overall efficiency of the U.S. payment system. It also supports the creation of a new document called a Substitute Check or Image Replacement Document (IRD). Under state and federal law, a Substitute Check is the legal equivalent of the original paper check, and can be used in the same way.

What is a Substitute Check?
A Substitute Check is a paper reproduction of an electronic image of an original paper check. It is a legal replacement for the original check. A substitute check will contain the same information as the original check. It will contain an image of the front and back of the original check, all endorsements that were on the original check, and a MICR line that includes all the information from the original check. It will also bear a legal equivalence legend that states, “This is a LEGAL COPY of your check. You can use it the same way you would use your original check.”

Click here to view a sample of a substitute check.

How Check 21 May Affect You
As a WoodTrust Bank customer, you will continue to write checks as you normally do. If you receive images of your checks with your bank statement, you may start to see a combination of images of original checks and substitute checks on your bank statement. Also, if you deposit a check and it is returned to you as unpaid, you may receive a substitute check in place of the original.

Float Will Disappear
Some of the checks you write may be processed more quickly. More rapid processing of checks will mean less float…the time between when a check is written and when it clears. As always, you will want to be sure there are adequate funds in your account when checks are written to avoid potential problems.

What Can I Do To Manage My Accounts More Easily?
WoodTrust Bank offers Free Online Banking and Telephone Banking to help you monitor your balances and transfer funds 24 hours a day. You can also receive e-mail alerts when your checking account falls below a balance level you have selected. With Direct Deposit of your paycheck or Government Check, you can ensure that deposits are made as quickly as possible. And you can protect against the problems of an overdrawn account with WoodTrust Bank’s overdraft protection plans.

Other Electronic Payments
You may already have experienced two other types of electronic payment known as “check conversion”. These payment methods use the Automated Clearing House “ACH” system to convert your check to an electronic debit.

In the first example, a merchant converts a paper check into an ACH payment at the point of purchase. In this situation, the store clerk converts the check into an electronic payment and returns the original check to you. This electronic check will be listed in the Debits section of your statement and will be identified as an “Electronified Check”.

In the second example, regular billers ( i.e. utilities and credit card providers) convert your check payments into ACH payments. The check has been converted into an electronic format and you don’t receive an image of the original check. This payment will also be listed in the Debits section of your statement as an “Electronified Check”.

Both of these example transactions are different than Check 21 and substitute checks. However, all of these methods of processing payments allows for faster payment processing and better service for customers.

Frequently Asked Check 21 Questions
Q: How will the Check 21 law affect me?

A: Generally, it will have no impact on the way you write or use checks. However, if a check you deposited to your account is returned unpaid, you may receive a Substitute Check which looks different than the original check, but is the same for all legal purposes.

Q: What will a Substitute Check look like?

A: In many ways, the Substitute Check looks like the original paper check. The size of the Substitute Check will be similar to the size of a business check; it will always contain the same information as the original check and it will show the front and back of the check, including endorsements. It will contain the following wording on the left side of the document: “This is a legal copy of your check. You can use it the same way you would use the original check.” The appearance of each Substitute Check may vary slightly depending on the type of equipment used in the processing.

Q: Will I still be able to get my check images with my statement?

A: Customers with accounts who currently receive check images with their statements will continue to receive check images – but some or all of these items may be images of Substitute Checks.

Q: What happens to my original checks?

A: In many cases, banks will continue to process and clear checks just as they have in the past. However, banks that convert checks to Substitute Checks will most likely destroy the original paper checks shortly after the Substitute Check has been created.

Q: How do I get a copy of a check I’ve written?

A: You can follow the same steps you do today. Just visit any WoodTrust Bank location, or call the phone number on your statement, and we’ll be happy to assist you in getting copies of the checks you need.

Q: If I deposit a check that is written to me and it is returned to me unpaid, will I get the original check back?

A: You will receive either the original check or the Substitute Check. Remember, the Substitute Check is a legal document and can be used the same way as the original check.

Q: Will the checks I write and deposit clear faster than they do today?

A: Over time, checks that you write may clear faster, checks you deposit may clear faster, and notification of checks you deposited that are returned may occur more quickly, too. It will be increasingly important to have funds on deposit before you write a check to avoid overdrafts.

Q: Can I refuse to accept Substitute Checks?

A: No. This new law requires everyone (banks, customers, businesses, government agencies, etc.) to accept a properly prepared Substitute Check as if it were the original check.

Q: What if I have other questions about Check 21?

A: If you have additional questions on Check 21 and how it affects you, call 715-423-7600, or visit us at any of our offices.

Related Links
Substitute Checks and Your Rights (WoodTrust Bank Disclosure Brochure)
Federal Reserve Consumer Guide

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