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#217895 - 07/30/04 04:04 AM Substitute check vs. copy of substitute check
Anonymous
Unregistered

The Section 229.57 of the final reg says: "For each consumer who actually receives a substitute check, the disclosure will be delivered at the time the consumer asks for a check or copy and receives a substitute check."
Does this mean that if we provide a copy of a substitute check (instead of an original substitute check) on request that we still have to provide the disclosure?

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#217896 - 07/30/04 06:43 PM Re: Substitute check vs. copy of substitute check
ahou Offline
Power Poster
ahou
Joined: Aug 2002
Posts: 3,094
No, you do not have to provide the disclosure if you provide a copy of a substitute check.
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#217897 - 07/30/04 10:16 PM Re: Substitute check vs. copy of substitute check
Anonymous
Unregistered

IF we are an imaging bank (meaning we already image all our checks and don't give originals)I guess I can't think of a situation where we would ever give out the original and keep the copy for ourselves? Could someone please help me turn the lightbulb on. Thanks.

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#217898 - 07/30/04 11:18 PM Re: Substitute check vs. copy of substitute check
Anonymous
Unregistered

I agree, nobody gives customers back an original check on special request. Therefore, the Fed sure sounds like it is requiring banks to provide a disclosure when either an original or a copy of a substitute check is given to a consumer on special request.

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#217899 - 08/02/04 04:36 PM Re: Substitute check vs. copy of substitute check
ahou Offline
Power Poster
ahou
Joined: Aug 2002
Posts: 3,094
[the Fed sure sounds like it is requiring banks to provide a disclosure when either an original or a copy of a substitute check is given to a consumer on special request]

You only have to give the disclosure when you provide a "real" substitute check. A "real" substitute check meets all the requirements under the definition of substitute check including magnetic ink in the MICR Line.

See preamble to final rule for 229.54 concerning expedited recredit rights. The preamble discusses that when the Act gives rights to a person that received a paper or electronic representation of a substitute check, it explicitly so indicates. The preamble also states "In addition, only those consumers who receive substitute checks are entitled to the consumer awareness disclosures....."
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#217900 - 08/02/04 05:34 PM Re: Substitute check vs. copy of substitute check
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
One receives the warranty protections under Check 21 whenever one receives (and is charged for) a substitute check or any representation of a substitute check, regardless of whether one ever receives the actual substitute check. This is true whether or not one is a consumer.

But a bank need only provide the §229.57 disclosures to consumers who will receive original paper checks (and presumably actual substitute checks) in their bank statements after 10/28/04, and to consumers to whom actual substitute checks are provided on an occasional basis.

Expedited recrediting under §229.54 similarly only applies to consumers who have received an actual substitute check (whether or not they still have it), and can demonstrate that they were improperly charged for the substitute check or that they have a warranty claim for the substitute check.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
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#217901 - 08/06/04 12:36 PM Re: Substitute check vs. copy of substitute check
Rob K Offline
100 Club
Rob K
Joined: May 2003
Posts: 165
Tennessee
Not to belabor the point, but John's post confirms my interpretation that as an imaging bank we will not provide the disclosure to someone who receives only an imaged copy of a substitute check from us.
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#217902 - 08/24/04 03:58 PM Re: Substitute check vs. copy of substitute check
Anonymous
Unregistered

I don't know if I really understand. We do not routinely provide customers their checks with their statements. So, the only way a customer will receive a substitute check, is if they request their original check. The Federal Reserve processes our checks. So, if a customer requests a copy of their check, and the Federal Reserve sends us the substitute check - how will I know if it is a copy or the actual (other than by knowing the ANS standards when they come out)? If it's a copy, are you saying that a customer doesn't have the right to expedited recredit or that a consumer awareness disclosure is not necessary? Thanks!

Mary B.

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#217903 - 08/24/04 04:24 PM Re: Substitute check vs. copy of substitute check
Bear Collector, CRCM Offline
Diamond Poster
Bear Collector, CRCM
Joined: Nov 2000
Posts: 1,830
District of Columbia
Mary B,
If you receive a Substitute Check from the Fed it will be an original substitute check. (Hmmm..."original substitute" - isn't that an oxymoron?) I can't imagine why the Fed would only send you a copy.
BC
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#217904 - 08/24/04 04:49 PM Re: Substitute check vs. copy of substitute check
Anonymous
Unregistered

I guess I am confused because right now they send a paper copy of the front and back of the original check (which is not a substitute check). Isn't it possible that they could do the same with a substitute check? Or if they do send the original subsititute check and we make a copy and send it to the customer, wouldn't that now eliminate the requirement to send a disclosure and the customer's right to recredit? Why wouldn't everyone avoid giving the actual substitute check then? I attended Ted's web/phone seminar yesterday and am trying to grapple with what our requirements will be! Thanks for your help!

Mary B.

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#217905 - 08/24/04 05:06 PM Re: Substitute check vs. copy of substitute check
Anonymous
Unregistered

OK - I'm thinking this through as I write this. I am thinking that the only time our customer will have an actual substitute check is when a deposit is returned, if the Federal Reserve sends copies of substitute checks when checks are requested by our customers. Sound right?

Mary B

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#217906 - 08/24/04 06:09 PM Re: Substitute check vs. copy of substitute check
SJB Offline
Diamond Poster
SJB
Joined: Jun 2002
Posts: 1,210
California
Your bank will get some substitute checks drawn on your customers' accounts. You then either send those with other actual checks with monthly statements or, if you are imaging, you send images of the substitute checks with images of actual checks with the monthly statements.
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#217907 - 08/24/04 07:07 PM Re: Substitute check vs. copy of substitute check
Mary B Offline
Junior Member
Mary B
Joined: Dec 2000
Posts: 34
Kansas
We don't send the originals or imaged copies of checks with our customer statements. If they want to see a copy, they request them. So, the only instances when our customers would receive an actual substitute check is if we send them to the customer when they request a copy of their original check or when they receive a returned deposit check that was processed as a substitute check.

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