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New Check Law Goes Into Effect.


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FYI: An email I received at work -


Subject: Hot News! No More Floating Checks as of October 28th


As of 28 October it will no longer be possible to float a check.


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 your account, 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.


"Check 21" is 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?


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


2. 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.


3. 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.


4. 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.


Here is a link that has info.

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Even though I don't practice this, it seems ludicrous to believe that all stores will have access to this electronic debit system. Not to mention the fact that my bank has a policy that all electronic checks debited from my account has 24 hours to get them a hard copy of the check. If they don't recieve it they will reverse those charges.



To me this is going to be more of a headache than a help. I wonder what congress is going to do, now that they can't write anymore bad checks and now float checks. ::P:

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I don't remember the last time I wrote a check in a store. It's an interesting law -- technology at work -- but, happily it won't even come close to affecting me.



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I see people writing checks all the time in stores. After college I worked as an butt't manager at Suncoast for about 3 months and saw plenty of checks go through there. In fact, just this weekend when we went grocery shopping I saw a woman write a check. Why she wouldn't use a check or debit cards I have no idea (it takes a few seconds to run one through; it can take a couple of annoying minutes to write a check, get it verified by management, have it franked, etc...).


Of course if you're a gambler you can stil "float" checks if you mail them, taking advantage of mail times. This can garner you a few extra days (I often write my bills and mail them the same day I deposit my paycheck...)



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Basically this means that companies get your money one to two days quicker. Not everyone will be effected by this, because it is pretty much up to the bank if they want to do it. For example, small credit unions out in the sticks probably would use the old fashioned method rather than spending a pile of money on high tech imaging and/or printing equipment. However, banks/CU's could contract with someone to do this for them.


Is this a good thing for the average person? Maybe, maybe not... It all depends if banks and corporations (basically people that are cashing your checks) pass the savings on to the consumer. Will that happen? Who am I kidding, of course not.


As an employee for a large company that deposits a multitude of checks daily, its a good thing for the company but we are expecting a spike in bounced checks also.


I write so few checks myself its of no concern... but I know a lot of people like to play the mail & check float game... :ph34r:

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The banks pushed that legislation through with the help of Alan Greenspan because it will save them GAZILLIONS of dollars. The technology has been available for a couple of years and FDR has been pushing it pretty hard for the last 18 months or so.


I won't bore you with a the gory details of it, (and you are welcome ::D: ) but basically this legislation is the first step to eliminate checks as a mode of payment.

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And people still write checks for a multitude of reasons:


1) Their bank/credit union does not yet support the check/debit card system.

2) They like to float checks (which is now being removed from them).

3) It's easier to keep a record carbon copy of a check for balancing the checkbook than it is hanging onto a loose peice of paper (the receipt).

4) They don't like credit cards or the ease in which someone can use one to wipe out their entire checking account in one evening at the mall (this happened over the course of three hours to my mom one night... over $900 needed to pay bills with). If retailers instilled in their employees the importance of following proper procedures in accepting credit cards and made certain of strict adherence to those procedures, there would be a lot less credit card theft. As it is, people still get away from not signing the back of their card (allowing anyone to sign the name on the front in their own handwriting and thus have a perfect signature match every time) to using their boss's/spouses/parents' credit card, to using cards where the signature line has rubbed off (thus voiding any credit card where this has occurred and is replacable by the credit card company for free). This is the reason I have a credit card where it's not linked to any of my bank accounts, but I put on it just as much as I need for whichever purchase I'm making. It's also not linked to my Social Security Number or any other information other than my name and address.


I don't have a checking account for many reasons, one of them being checks and the debit card. While it is convienent, you end up paying out the nose for them (monthly charges, bounced check charges if you don't keep a strict watch on your balance, among the hassles of dealing with a bank). I also don't like how easy it is to steal someone's check/credit card and wipe out their checking account. Checking accounts are different from credit cards in that they contain the money you use for food, housing, and other necessities. Credit cards are typically used for other kinds of purchases.

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MMM.. so what happens when somebody steals someone's checkbook?

There had better be good safeguards on the scaning program to ensure it looks at the right signature, otherwise you could empty someone's account and they wouldn't have time to bounce the checks at the bank.

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I don't remember the last time I wrote a check in a store. It's an interesting law -- technology at work -- but, happily it won't even come close to affecting me.



Same here... As a matter of fact, nothing angers me more than being on the "10 items or less" line at the grocery store and see someone in front of me writting a check for the 2 or 3 items they have... :angry:


Hasn't anyone told them how a check card works? It's just like a credit card people! You dont have to use the debit function. If you use the CC function you get a couple of days before the funds are actually withdrawn...


I also pay all of my bills online, I honestly dont remeber the last time I had to lick a stamp -_-


The only complaint I have with check cards is that now, just about every where you go, they have those little card readers you swipe yourself. This bothers me for two reasons:


1st - everyone has a different card reader and the cashiers act as though you should inherently know how they all work... perhaps they hold weekly training and i'm missing out? <_<


2nd - why is it all of a sudden my job to run my card through? what ever happened to customer service?


Ok OK, I'll admit that I have a problem with manual labor but really, who does this "new and improved convinient technology" really benefit? I've only mentioned the card readers but this applies even more to those new "self-checkout" computers. I honestly prefer to have a friendly cashier do all the work and let me enjoy the fruits of my purchases versus not only handing my money over to the company for overpriced product but also doing the job of a cashier at no charge!!! :blink:


Am I the only one who thinks along those lines? The irony is that I am an application developer, constantly looking for cooler and more effective technology, who happens to also beleive that technology is in many ways responsible for, among many other evils, the stupidification of our society :unsure:

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Well, that's nice to know. Oh, and people who tend to live from pay check to paycheck float checks a lot. I know because there are several people at work who do this. Single mom's who need to pay all the bills, but "Oh! Bobby needs some shoes, if I time everything just right I can buy them this day and the check won't get to the bank til..." Think once I get my ink cartridge today I will print that and put it up at work.


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