Regulatory Information


What Happened to the Paper Check?

This informative brochure explains the bill payment check conversion process and answers a number of common questions about check conversion. (Download PDF Brochure)

Check 21 Act

Check 21 Act Brings Changes to Checks

In October 2003, the Check Clearing for the 21st Century Act became law. Now known simply as Check 21, the legislation's goals include “to improve the overall efficiency of the nation's payments system.”

Sample Substitute CheckToday, most checks must be physically transported—whether across town or across the country—before they can be cleared. This is expensive and time-consuming.

Check 21 provides a new option: legal acceptance of paper reproductions of original checks.

This reproduction is called a “substitute check” and is produced from a digital image of the original check.

How Will Check 21 Affect You?

By Oct. 28, 2004, every bank will be required to accept substitute checks, just as they currently accept your original paper checks. If you receive your canceled checks or electronic images of your canceled checks with your account statement, you will begin seeing substitute checks after that date. A substitute check is the legal equivalent of the original check and will include all the information contained on the original.

Check 21 includes several safeguards for check writing consumers. Check 21 helps speed check clearing, so check fraud can be discovered faster. Faster fraud detection means faster resolution for customers. Another safeguard: A bank that creates a substitute check must warrant that it is accurate. The bank also has to make sure that the substitute check is produced in accordance with industry standards for quality.

A Word About Check Conversion

You may already have experienced two other emerging payment practices, and each is an example of “check conversion,” which uses the automated clearinghouse, or ACH, system.

In the first example, a retailer converts a paper check into an electronic ACH payment on the spot. In this situation, if you've written a check for a purchase, you are handed the check back immediately after it's converted into an electronic ACH payment at the store or shop.

In the second example, regular billers (telephone, utilities and credit card providers, for example) convert your check payments into ACH payments. The check has been “converted” to an electronic format, and you won't receive a copy of the original. The payment will be reflected in your bank statement, which becomes the legally accepted proof of your payment.

Keep in mind that both of these example transactions are different from substitute checks.

All of these changes allow for faster payment processing and even better service to the nation's banking customers.

Efficient Check Clearing Benefits You

The improvements brought about through Check 21 allow for faster payment processing and even better service to you, the banking customer. A few of the benefits include:

  • Faster check clearing
  • Decreased fraud
  • Less paper
  • Increased security

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FACT Act-Free Credit Reports

As permitted by the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), consumers will be able to request a free annual credit report from the three consumer reporting companies- Equifax, Experian, and TransUnion.

The FACT Act amends the Fair Credit Reporting Act and has three major objectives:

  • Enhance the ability of consumers to combat identity theft
  • Increase the accuracy of consumer reports
  • Allow consumers to exercise greater control regarding the type and amount of marketing solicitations they receive

The free annual credit reports will be phased in across the country from west to east over a nine-month period. Consumers in eastern states, which include Pennsylvania, can order their reports beginning 9/01/2005.

Learn more about free credit reports ( website)

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