posted 09-21-2004 07:23 AM         

I know that we would never do that, but just in case you know someone who
might try please read this. A new law goes into effect on 28 Oct and all
checks will be cleared electronically within minutes...even at night, even
on weekends. If payday is Monday and you write a check on Saturday
assuming it won't clear before your paycheck is in you will be wrong-that
check will bounce. And you will be charged overdraft fees.

Be aware of what you are doing and the affect it could have on your credit
rating or career. Make sure funds are available before you write a check.

<http://www.consumersunion.org/finance/ckclear1002.htm>

<http://www.federalreserve.gov/paymentsystems/truncation/default.htm>

"Check 21" starting in late October
You've probably bought something in a store with a check even though you
don't have the money in your account at the time. You figure you have a few
days for the check to clear, and by then the money will be there. It's
called the "float." Well, the float is slowly becoming a thing of the past.
Because of a new law going into effect in October, money will be drafted
from your account immediately when you write a check. It's called "Check
21," and it allows retailers to scan your check through a machine that
deducts the cash within minutes. It's essentially the end of the paper
check system, as well, because the check will eventually be destroyed.
There will be an image of the check online and that will serve as proof if
you need it. But everything is becoming electronic, and a bank will know if
a check is good right away. So, be prepared to move to an electronic bill
pay system. It's the smart way to go. What about checks that you deposit?
Well, the float is no longer available to you, the customer. But the bank
still will hold a deposit for a few days to make sure it clears. It's not
fair, but it's the way it's happening.

What are the main effects of "Check 21" on consumers?

· You won't be able to get your original paper checks back,
because your bank will no longer have them.

· Checks you write will clear sooner, increasing the risk that
a check will bounce if funds are not in the account when you write
the check. Don't write a check unless the funds are already in the
account to cover it.

· " You may not get access to the funds from checks you deposit
any sooner, because the new law does not shorten check hold times.
After 30 months, there must be a study on whether banks are making
funds available to consumers earlier than the allowable hold periods.

· Banks will save money on processing checks, but banks are not
required to share these savings with consumers.

· Different kinds of copies of a check will have different
rights attached. Check 21 creates a new kind of paper copy of an
electronic image of a check. This special kind of copy is called a
"substitute check." Only a substitute check can be the legal
equivalent of the original check, and only a substitute check
triggers your right to recredit of disputed funds. A regular copy of
a check does not carry these same protections. If you ask for a copy
of a check, your bank may send you an ordinary copy instead of this
special kind of copy which triggers legal rights and protections
unless you ask for a substitute check.

· "A bank other than your bank will have your original check,
and will decide whether to destroy it. Neither Check 21 nor other law
requires a bank to keep your original check for any period of time.
Before Check 21, your own bank decided how long to keep your original
checks, if you didn't get them returned with your statement. Under
Check 21, the bank of the person you wrote the check to may decide
when to destroy your check.

· Consumers will get new rights for some electronically
processed checks, but not for others. When a so-called "substitute
check" is provided to a consumer, Check 21 gives the consumer a right
to have funds of up to $2,500 recredited to the consumer's account in
10 business days if the check is paid twice, paid for the wrong
amount, or otherwise paid in error. The statute is ambiguous about
whether this new right applies when a paper substitute check is used
in the processing of the check but is not returned to the consumer.
The regulations restrict the right of recredit only to checks where
the consumer was provided with a substitute check. If a check is
processed electronically by all the banks it is routed through
without the use of a substitute check and the consumer is not
provided with a substitute check, then the check remains under state
check law. In that case, the consumer does not receive a 10 day right
of recredit even if the electronic image of the check is paid twice,
paid for the wrong amount, or if both the electronic image and the
paper check are paid.

· Consumers who want to maximize their consumer rights should
ask for return of "substitute checks" with their checking account
statements. Watch out for fees associated with a substitute
check-returning account. Look for another bank if your bank charges a
high fee to get copies of all your checks as substitute checks.

· Only the special "substitute check" can be legally equivalent
to the original check to prove payment. The copies that a bank sends
to consumers under a so-called "voluntary truncation" agreement,
where the consumer agrees not to get the checks back, do not prove
that a payment has been made, and do not trigger your Check 21
recredit right.

When do these changes go into effect?

Check 21 becomes effective October 28, 2004.