What is Check 21?
Check 21 (Check Clearing for the 21st Century Act) is a new federal law that took effect on October 28, 2004. It impacts all U.S. financial institutions, not just Village Bank. The goal of Check 21 is to reduce paper, combat fraud and streamline how checks are processed through the banking system. It gives financial institutions the option to move checks electronically by allowing them to replace an original check with a substitute check when necessary.

What is a substitute check?
A substitute check is a paper reproduction of an original check created during the check collection and return process from an electronic image of the original. It is a legal replacement for the original check. A substitute check contains the same information as an original check. It may be slightly larger than the original check and will show a slightly smaller image of the front and back of the check.

You may notice that some substitute checks look different than others. The appearance of a substitute check depends on which bank is processing the check and the type of equipment they are using. However, a substitute check will always include wording that identifies it as a legal copy of the original check This is a LEGAL COPY of your check. You can use it the same way you would use the original check.

How does Check 21 affect you?
As a Village Bank customer, you can continue to write checks as you normally do. If you received your canceled checks back in your monthly statement, after October 28, 2004 you may start to receive a combination of original and substitute checks. Also, if you deposit a check and it is returned to you as unpaid, you may receive a substitute check in place of the original.

 Remember, a substitute check has the same legal status as the original check. So if you need to show proof of payment, the substitute check will be accepted the same as the canceled original check would have been. However, you should not accept a substitute check as payment for a good or service. Substitute checks are only created during the check collection and return process to replace the original check.

Also, there are several instances where you will now see copies of substitute checks, such as on a Check Image Statement (statements that contain reduced-size check images), when viewing checks through Online Banking or when you request a copy of a canceled check.

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