It's Here - Ready or Not: New Era Arrives with Check 21
The Federal Reserve Board has released the final rule to implement Check 21, including the model disclosure language to use in notifying consumers of their rights under the law. Also posted on their web site are the final amendments to Regulation CC to implement Check 21.
Fed repeated in their release the fact that the law does not require banks to accept checks in electronic form, nor does it require banks to use the new authority granted by the act to create substitute checks. Even though the October 28 date is considered a "deadline", it is simply the date on which banks must be prepared to accept substitute checks instead of originals from financial institutions that have chosen to truncate. Estimates by one service organization are that as of September about 30 percent of large financial institutions and 40 percent of mid-sized ones are image-enabled. Larger banks are expected to convert more rapidly over the next few years, and experts say that by 2007 all of the large banks, 80 percent of the mid-size banks and up to 50 percent of the small banks will be image-enabled. Many mid-sized and small financial institutions have adopted a "wait-and-see" attitude, according to experts, hoping that all the "bugs" get worked out before they decide to make the investment to come on board.
Fed also has posted a page of Frequently Asked Questions about Check 21. The 27 questions and answers on that page should clear up any misunderstandings regarding the new law. It can be accessed at http://www.federalreserve.gov
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 07, 10/04
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