Press Releases

For Immediate Release
October 21, 2004  

Check 21: DFI Urges Consumers To Prepare for Change to Check Processing Laws

(Madison) Next week Thursday, October 28, 2004, the federal Check Clearing Act for the 21st Century, or Check 21, goes into effect and the processing of checks will change dramatically. Check 21 will affect all consumers who write checks and it is important for the public to be aware of these changes.

The purpose of Check 21 is to allow financial institutions and merchants to use an entirely electronic record of a check. Today, banks must physically move paper checks from the banks where they are deposited to the banks that pay them. Under Check 21, banks will be able to do this electronically and, therefore, will cut down on the time and expense now associated with processing paper checks.

One of the major impacts on consumers as a result of Check 21 is that the lag time between when the check is presented to the bank and when the bank withdraws the money from the checking account will be minimal. “The basic thing to remember under this new process is not to write a check unless you already have the cash in your checking account,” warned Lorrie Keating Heinemann, Secretary of the Department of Financial Institutions.

Check 21 also creates a “substitute check.” A substitute check replaces cancelled paper checks as proof of payment and is a specialized printout of the electronic image of the front and back of the original check. The substitute check is the legal equivalent of the original paper check and is not just a photocopy. Consumers may request substitute checks from their financial institutions.

“I urge all consumers to go to our website and read the information sheet on Check 21 that we have put there,” said Keating Heinemann. The Department of Financial Institutions website also provides a link to the Federal Reserve Check 21 FAQ sheet. Both are available at: