What is Check 21?

"Check 21" refers to a change that was made by Federal law, to the way we handle payment by a check.  Beginning in October, 2004, Federal law recognized a new type of payment document called a "substitute check" that is used for clearing and settlement.  A substitute check is similar in size to the original check with a slightly reduced image of the front and back of the original check.  The front of the substitute check states:  "This is a legal copy of your check.  You can use it the same way you would use the original check."  You may use a substitute check as proof of payment just like the original.  Some or all of the checks that you receive back from us may be substitute checks.  Here is what a substitute check will look like:

Why did the government implement Check 21?

Over 40 billion checks are written annually in the United States, and they follow a long journey starting at the time a check is written.  When you write a check, your check is cashed or deposited at a financial institution, processed by credit unions or banks and then sent to your credit union for payment.  All of this transporting of checks is expensive, costing billions of dollars a year.  While the financial industry is working hard to streamline the process and make use of new electronic technology, members will still be able to use the familiar paper check to make payments because the industry is designing a 21st century system that allows paper to work in the electronic world. 

How does Check 21 affect me?

There is no longer be a "float" time...Processing of checks is very rapid.  You will want to make sure that adequate funds are in your account when the check is written to avoid potential problems.  GMCU offers Creditline Overdraft Protection.

There will be a reduction in fraud...The faster collection and return of checks facilliated by Check 21 should reduce overall fraud in the check collection system. Credit unions and other financial institutions should be able to collect/return checks faster and utilize new image analysis fraud tools to help identify fraud and errors more quickly. 

What are my rights regarding substitute checks?

In certain cases, federal law provides a special procedure that allows you to request a refund for losses you suffer if a substitute check is posted to your account (for example, if you think that we withdrew the wrong amount from your account or that we withdrew money from your account more than once for the same 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 (for example, bounced check fees). 

The amount of your refund under this procedure is limited to the amount of your loss or the amount of the substitute check, whichever is less.  You are also entitled to dividends on the amount of your refund if your account is a dividend-bearing account.  If your loss exceeds the amount of the substitute check, you may be able to recover additional amounts under other law.

If you use this procedure, you may receive up to $2,500 of your refund (plus dividends if your account earns dividends) within 10 business days after we received your claim and the remainder of your refund (plus dividends if your account earns dividends) not later than 45 calendar days after we received your claim.

We may reverse the refund (including any dividends on the refund) if we later are able to demonstrate that the substitute check was correctly posted to your account.

How do I make a claim for a refund?

If you believe that you have suffered a loss relating to a substitute check that you received and that that was posted to your account, please contact us within 60 calendar days of the date that we mailed (or otherwise delivered by means which you agreed) the substitute check in question or the account statement showing that the substitute check was posted to your account, whichever is later.  We will extend this time period if you were not able to make a timely claim due to extraordinary circumstances.  Your claim must include:

• A description of why you have suffered a loss (for example, you think that 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 a loss; and
• A copy of the substitute check (and/or) the following information to help us identify the substitute check: (identifying information, for example the check number, the name of the person to whom you wrote the check, the amount of the check).