What is Check 21?
The Check Clearing for the 21st Century Act, or Check 21, was signed into law on October 28, 2003, and goes into effect on October 28, 2004. The act is expected to change the way the banking industry processes checks.

Simply put, Check 21 allows financial institutions to provide a substitute check, or IRD (Image Replacement Document), instead of the original check for processing.

Why was Check 21 passed?
The terrorist attacks of September 11, 2001, temporarily shut down the nation's airlines, delaying the payment of millions of checks. Check 21 should increase the efficiency of the check clearing system by allowing banks to process checks electronically, thereby eliminating the dependency on physically transporting checks around the country.

What is a substitute check?
To make check processing faster, federal law permits banks to replace original checks with "substitute checks." These checks are similar in size to original checks with a slightly reduced image of the front and back of the original 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 use the original check." You may use a substitute check as proof of payment just like the original check. See sample IRD pictured below.

Some or all of the checks that you receive back from us may be substitute checks. This notice describes rights you have when you receive substitute checks from us. The rights in this notice do not apply to original checks or to electronic debits to your account. However, you have rights under other law with respect to those transactions.

How does Check 21 affect my account?
The most significant difference you will encounter with Check 21 will be in your bank statement-whether you have a commercial or consumer checking or Money Market account. Check 21 does not require a bank to accept electronic images; however, the bank must accept IRDs instead of original checks when presented.

As a result, if you have checks returned with your statement, you may now start to receive IRDs in your statement instead of the original checks. In this matter, the bank has no option. If an IRD is presented to us, there is no way we can obtain the original check to return to you. For Check Image statements and for viewing check images online you may see an image of an IRD instead of the original check.

What are some benefits and assurances of Check 21?
In addition to increasing the efficiency of the check clearing system, a long term benefit of electronic payment processing will be improved funds availability. The act also supplies added consumer protection by requiring banks to warrant that no party will be asked to make payment on an IRD and an original check. In other words, by submitting an IRD, a presenting bank guarantees that the IRD meets all legal requirements and that the receiving bank will also not receive the original check for payment.

What has Bank of Arizona done to facilitate the Check 21 changes?
Over the years Bank of Arizona has implemented several check imaging systems, including Retail Lockbox and Return Items. To help prepare for Check 21, we have upgraded our check image archive, offered check image viewing via the Internet, and developed procedures to ensure a smooth transition to the new processes that will be created as our industry evolves.

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 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 interest on the amount of your refund if your account is an interest-bearing account. If your loss exceeds the amount of the substitute check, you may be able to recover additional amounts under other laws.

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

We may reverse the refund (including any interest 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 was posted to your account, please contact our 24-Hour ExpressBank at 588-6010 in the Tulsa area, at 272-2548 in the Arizona City area, or at 1-866-492-1339 outside these areas. You must contact us within 40 calendar days of the date that we mailed (or otherwise delivered by a means to 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 because of extraordinary circumstances.

When calling to submit a claim, you must provide the following information:

• 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 a loss; and
• 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. A copy of the substitute check may also be required.

Where can I get more information on Check 21?
For specific questions regarding your account, call one of the numbers listed below or visit a Bank of Arizona location near you.