Unhappy customer, need help. Our customer has been the victim of identity theft several years ago (she did not bank with us at the time). Recently she wrote and mailed a check to her credit card company. They turned the check into an ACH debit. We processed it and debited our customer's account. I called the credit card company and they said they sent all their customers notice in January, 2003 stating that they would begin changing credit card payments made by check into ACH debits. If the customer agrees with the practice, they could do so by either using their card or keeping their account active/open.
The customer is calling and is very upset that the bank allowed the item to go through. I have not talked to her regarding the fact that the credit card company sent her notice that they were changing how they process checks (and she probably did not read it). But she does bring up a good point. How do banks check to be sure the ACH is authorized by our customer? (since we do not actually see her signature on the check that is supposedly the basis for the debit). With in-person check transacions you normally get the check back stating it is being converted into an ACH. But what about other instances? How do we know that this debit was authorized (for example signed) by our customer and where the check was mailed to the vendor?
Can you tell I don't work in the Bookkeeping/ACH area?

That's why the customer has 60 days to dispute the transaction. Warn your customer about Check 21, too. If he/she is not happy with this situation, you'll have a fight on your hands when October nears an end.

We have discussed this before. The bank had no choice in this case and the customer agreed with the credit card company to allow this, whether they knew it or not. You are NOT the bad guy. But as noted, this customer will hate Check 21.

A keyword search will reveal other discussions on this and potentially helpful information.

Customers will not necesarily hate Check 21 because the substitute check will accurately and legally represent the check they wrote. There are mixed opinions on how many IRDs will even be created. One large bank has stated they will not create one. IRDs will only be created where there is value to be gained. They will not be an automatic replacment of the original check as ARC and POP are.

Thanks everybody. Very helpful. Now I'm just going to get busy and look up POP, ARC and IRD......

Anon,
Click on this link for a side by side comparison, complete with acronyms.

As for predictions about what customers will "hate" the effects of Check 21, my feeling is that banks currently sending image statements will get little feedback. However, those that still include cancelled checks with their statements will get open resistance to the substitute check. Like the customer in the original post, they will feel like they should have had some right to say, "No."

Banks may be able to mitigate or eliminate that resistance through advance communication with the customer, but they will have to do more than just send some legally required disclosures.

Hey Ken, thanks for the great link!