Check 21:

Substitute Checks, Electronic Processing, and What It Means to You

I

f you write checks, you should know about a new 

law called “Check 21.” Under the law, your paper 

checks can be replaced with paper copies called “substitute checks.” You also may experience electronic 

— and faster — processing of your checks.

What Check 21 Means to You

You may not get your original canceled checks in 

the mail with your regular bank statement anymore. 

Instead, you may get a substitute check — a paper 

copy of the front and back of your original check. It 

is slightly larger than a standard personal check and 

meets other requirements. A substitute check should 

state: “This is a legal copy of your check. You can use 

it the same way you would use the original check.” 

You can use a substitute check as proof of payment.

Here’s what a substitute check can look like.

June 2005

Front

Back
A Word About Electronic Check Conversion

Substitute checks and electronic check conversion are different. Both 

involve electronic processing, but the processes are different.

Electronic check conversion works like this: When you give your check 

to a store cashier, the check is run through an electronic system that captures 

your bank account information and the amount of the check. Once the 

check information is processed, you’re asked to sign a receipt and you get 

a copy for your records. When your check information has been processed 

and your check has been handed back to you, it should be voided or marked 

by the merchant so that it can’t be used again. The merchant electronically 

sends information from the check (but not the check itself) to your bank or 

other financial institution, and the funds are transferred into the merchant’s 

account.

Electronic check conversion also is used for checks you mail to pay for a 

purchase or to pay on an account. The merchant or company receiving your 

check electronically sends information from your check (but not the check 

itself) through the system, and the funds are transferred into their account. 

Your check is usually destroyed by the merchant or other company that 

processed the information; you may, however, ask them for a copy of the 

check, which they may have retained.

The bottom line? Electronic check conversion is an electronic fund 

transfer. The processed information will appear on your bank statement in 

an area with similar payments, like direct deposit of your paycheck, or debit 

card payments and withdrawals. Electronic check conversion has special 

protections for errors and unauthorized transfers under the Federal Electronic 

Fund Transfer Act.

2 FTC Facts For Consumers
Depending on your agreement with your bank, 

and whether due to Check 21 or other check 

processing changes, you may not get original checks 

or substitutes with your monthly statement. Instead, 

you may get a list of your electronically processed 

checks, or electronic images of your checks. Or you 

may get partial copies of several of your cancelled 

checks on one page. These items may not have all 

the required information to 

make them substitute checks. 

But you usually can use these 

items or other information 

from your bank statements as 

proof of payment.

Less or No “Float”

Check 21 allows banks to process checks more 

quickly. That means your check will reach your 

bank faster, and be paid sooner. It also means you 

may lose the “float” on your check. So if you write a 

check today, you need to have funds in your account 

today to cover it. If you don’t have sufficient funds, 

your check (and others you may write afterward) 

may bounce, and you may have to pay fees imposed 

by the merchant, your financial institution, or both. 

Bounced checks can blemish your credit record. If 

you’re concerned about bounced checks, you may 

want to consider overdraft protection or a backup 

line of credit on your account. Your financial 

institution may charge for these services. 

Consumers have certain rights related to these 

check payments. For example, by law you are 

protected against wrong and unauthorized check 

payments, whether you get back a paper check, a 

substitute check, an electronic image of the check, 

or a line-item description of your check. Check 21 

includes a special refund procedure if you suffer a 

loss related to a substitute check you receive. 

Avoiding Errors

Legibility is important. Illegible checks can lead 

to improper payments, because they are based on 

information from your check. Illegible checks also 

can affect the clarity of electronic images of your 

checks and can make it more difficult for you to 

show proof of payment.

Careful record-keeping 

also is critical. Use your 

check ledger to record every 

check you write. That helps 

avoid errors in your account 

and overdrafts. Promptly 

review your monthly bank 

statement when it arrives. Contact your bank as soon 

as possible if you suspect errors on your account, 

including any duplicate or incorrect items.

For More Information

Q Contact your financial institution. 

Q Visit the Federal Reserve Board at 

www.federalreserve.gov. 

The Board’s Consumer Guide to Check 21 and 

Substitute Checks (www.federalreserve.gov/pubs/

check21/consumer_guide.htm) describes how 

consumers may be affected by the new law 

and provides information on how to resolve 

problems associated with the receipt of substitute 

checks. A second consumer guide from the 

Board, What You Should Know about Your 

Checks, (www.federalreserve.gov/pubs/check21/

shouldknow.htm) discusses how check payments 

have changed, including the increased use of 

electronic check conversion, a process separate 

from Check 21. 

Check 21 allows banks to 

process checks more quickly.

FTC Facts For Consumers 3
Q Visit the FTC at ftc.gov for a copy of Electronic 

Check Conversion.

The FTC works for the consumer to prevent 

fraudulent, deceptive and unfair business practices 

in the marketplace and to provide information 

to help consumers spot, stop and avoid them. 

To file a complaint or to get free information 

on consumer issues, visit ftc.gov or call toll-free, 

1-877-FTC-HELP (1-877-382-4357); TTY: 

1-866-653-4261. The FTC enters consumer 

complaints into the Consumer Sentinel Network, 

a secure online database and investigative tool used 

by hundreds of civil and criminal law enforcement 

agencies in the U.S. and abroad.

4 FTC Facts For Consumers

For The Consumer Federal Trade Commission

ftc.gov 1-877-ftc-help

Federal Trade Commission

Bureau of Consumer Protection

Division of Consumer and Business Education