 | Mark Kolarik is the President of the Kansas Teachers Community Credit Union, located in Pittsburg, KS, since 10-2002 and is a board member of the Kansas Corporate Credit Union located in Wichita, KS . He has been employed in the financial service industry for the last 31 years, having worked in several credit unions for 21years and 10 years in the banking industry. He holds a Bachelor of Business Administration degree from the University of Wisconsin-LaCrosse and is a Certificated Credit Union Executive. |
Banking & Finance
2011-09-29 15:33:44
Substitute checks
A: To make check processing faster, federal law permits retailers and financial institutions to replace original checks with “substitute checks”. Retailers and financial institutions are converting paper checks into electronic images for collection purposes. Once the image is transferred, the financial institution may create, from the image of the original check, a substitute check. These checks are similar in size to original checks with a slightly reduced image of the front and back of the check. The front of a substitute check states: “This is a legal copy of your check. You can use it the same way you would used the original check.” You may use a substitute check as proof of payment just like the original check.
The substitute check allows more rapid processing of checks and will reduce float (the time between when a check in written and when it clears your account). On average, the float time has been reduced to approximately 24 hours. So consumers will want to make sure that adequate funds are in their account when checks are written to avoid potential problems. Many retailers, after scanning the check, give the check back to you.
If you believe that you have suffered a loss relating to a substitute check that was posted to your account, contact your financial institution immediately. You must contact your financial institution within 40 calendar days of the date that an account statement was sent to you.
Your claim must include:
• A description of why you have
suffered a loss (for example, you
think the amount withdrawn was
incorrect);
• An estimate of the amount of
your loss;
• An explanation of why the
substitute check you received
is insufficient to confirm that you
suffered as loss, and
• Copies of the substitute check
(and/or) the following information
to help indentify the substitute
check: the check number, the
name of the person to whom you
wrote the check, and the amount
of the check.
The losses you may attempt to recover under this procedure may include the amount that was withdrawn from your account and fees that were charged as a result of the withdrawal.
