"Like It Or Not..."
A friend of ours, who is not a banker, recently forwarded a news article from New York - WABC, to our office. It was titled: "Like It Or Not, Big Changes Coming to Your Checking Account".
This news item, along with many others that will be in the media in the next few weeks are going to make your life in the branch office much less than ideal come October 28. It may be a real good time to schedule that vacation you've not yet taken.
Here are some of the "facts" that are passed on in this article.
"While cancelled checks are legal documents and can be used as proof of payment, electronic images cannot."
Somewhere along the line, the writer missed the part of the Check Clearing for the 21st Century Act, passed by Congress and signed by the president, that says in Section 4 (General Provisions Governing Substitute Checks) (b): Legal Equivalence. - A substitute check shall be the legal equivalent of the original check for all purposes, including any provision of any Federal or State law, and for all persons...
The substitute check says right on the face: "This is a legal copy of your check. You can use it the same way you would use the original check." The regulators, in their comments, have been careful to underline the fact that the substitute check, or the 'IRD' (Image Replacement Document) can be used as proof of payment.
"You don't have evidence that will hold up in a court of law in case you have a dispute. You have to have a legal paper check in order to deal with any dispute."
Hmmmm. That line above, from the Act itself, says "for all purposes including any provision of any Federal or State law..." Wonder what that reporter didn't understand about that?
"Under "Check 21" consumers can request banks to provide substitute checks that are legal documents. But banks are not required to make them available."
I'm going to have to ask. When was the last time one of your depositors asked you for a copy of a check from their account and you said, "I'm sorry, but I won't get it for you.""If they do, there is no cap on how much they can charge for them."
Well, no, there isn't. But there is a thing called competition. We are required to give the depositor a disclosure, saying how much copies are. And if a person doesn't like your prices, they may move their account to another financial institution that charges less. That's really not a change.
To make sure the consumer knows ALL the problems created by Check 21, the writer goes on to say that the law means more bounced checks and less time to stop payments, and there will be no more float time. She suggests treating your checking account like a debit card. (Actually, we don't think that's a bad idea!) She says the financial industry is going to save $2 billion a year and "....consumers are going to end up with the short end of the stick. They're going to be losing service."
What Check 21 really means to consumers is that eventually checking accounts are going to have to be maintained the way they were originally meant to be. The funds should be there and available before the check is written and given out. Not a bad idea.
Many of the quotes above are from Consumer Reports, a respected news source. If something as reputable as that publication can print such misconceptions, half-truths, and errors, what is your local paper going to be printing? And what frame of mind do you think your depositors will be in when they come storming in to your office?
So ... where could you go on vacation in late October?
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 6, 10/10
First published on 10/10/2004