LOUISIANA CENTRAL CREDIT UNIONUNDERSTANDING  21
On October 28, 2004 check and share draft clearing became more efficient. This notice is to explain what paying by check in the 21st century means. Federal law now recognizes a new type of payment document called a “substitute check” that is used for clearing and settlement. The Check Clearing for the 21st Century Act, the law that makes this possible, permits quicker processing of checks by allowing the receiving financial institutions to treat an electronic image the same as the check itself. The government, media, and industry call this new ability, CHECK 21.
Why is the government giving an electronic image the same rights as a paper check? Over 40 billion checks are written annually in the United States and they follow a long, winding trail starting when you write a check. Checks are then cashed or deposited at financial institutions, processed by depository banks and credit unions, sent to paying institutions and finally returned to payers. All of this transporting of checks is expensive, costing billions of dollars a year.
With CHECK 21, credit unions can now fully implement the efficiency of electronic transmission by taking a picture of the check or creating a legal “substitute check,” then transferring it electronically rather than transporting it via truck, train, or plane. All this is now done through our processor Southwest Corporate Credit Union.
This new efficiency has many significant benefits:
* Checks clear faster
* Check fraud decreases
* Security increases
* Check processing costs less
Here’s what you should know about CHECK 21:
 The substitute check will contain an image of the original check and will bear the legend: “This is a legal copy of your check. You can use it in the same way you would use the original check.” Substitute checks are required to accurately represent all the information on the front and back of the original check. Substitute checks are the legal equivalent of an original check for all purposes, including any provision of federal or state law.
Members who believe a substitute check was not properly processed may be entitled to a credit for the amount of the check pending an investigation.
If a member makes a claim, the credit union must investigate any claim, and, in most instances, either resolve the member’s claim within 10 business days, or provide the member with a re-credit of up to $2500.00 pending completion of the credit union’s investigation. Final determination of any such investigation must be made within 45 days.
CHECK 21 significantly reduces the amount of time required to move money out of your account and pay recipients of your checks. Your checks will clear faster and you will need to keep closer tabs on your accounts to make sure funds are available on time.
CHECK 21 is a new era of credit union efficiency and service. With it, you will be able to manage your accounts and your money using the best of today’s technology, with the promise of newer, easier financial transactions in the future. With CHECK 21 comes many changes but Louisiana Central Credit Union is well prepared and we are here to help smooth the way for you!
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