Check 21 Customer Awareness

My understanding is the Check 21 law doesn't go in to effect until 12 months after President Bush signed it. That would be November 2004. A customer called today because he wrote a check to pay his cellular bill and his check wasn't returned to him. It was on his statement as an EFT. Are some banks already implementing this law?

No - however, several vendors have begun to process checks received as payments as ACH POP transactions. Your customer should have received some mail from his cellular company explaining that this would occur, and when it would begin.

AT&T is doing this. I don't know who else is.

Foley's Department Store is doing this as well - and hidden in the customers statement micro=printing ( ) is verbiage that basically states that by sending them a check you authorize them to convert it to an electronic form of payment.
So what happens next? The customer comes in to yell at us - "What happened to the check I wrote them?"

Ah, life is good!!!

Tell them that the vendor to whom they made the payment has it, and the customer should ask them for it. Then tell the customer that you have no ability to require the vendor to retrun the check, because the customer authorized the vendor to process the item electronically.

I don't remember I had the opportunity to opt out of electronic processing or not (American Express does this; that's how I learned about it). Your customer's reactions show that there will be major customer education required as part of our Check 21 efforts.

Thanks for your help. I just took a crash course in NACHA rules regarding ARC transactions. Our customers are sooooo NOT HAPPY! This particular customer is 83 years old and no matter how you say it, he simply doesn't understand why he can't get the check he wrote back.

I entered a post that's now on page 3 called ACH, POP & Check conversions that deals with close to the same thing. Not sure how to shortcut that thread here, but you might want to take a look at it.

The customer is not given an option by these companies, and more and more of them are implementing this check conversion routine. The customer's only choices to avoid having a check converted are to avoid the vendor (like you're really going to change cable companies over this!), pay cash in person (last I knew no one was interested into converting cash to an ACH ), or pay these bills with a money order (how inconvenient is that?).

And it's all legal.

Trouble is, by the time we bankers realized how popular this routine would be, we had missed the opportunity to educate our customers.

We are all well-advised not to miss the education boat on Check 21!!

Here is a brochure published by the Federal Reserve that is a good tool to help educate customers regarding checks being converted into electronic payments. We put our own bank cover on it and have it available whenever these types of issues come up.

There are some pilot banks in the 12th district that are creating Image Replacement Documents (IRDs) and clearing them through the Fed system. It is my understanding that these banks have reciprocal agreements and are exchanging images of checks with each other. Banks outside of the pilot may also receive IRDs from the pilot banks.

I am located in the 7th district and we received our first IRD on 11/17. The back of the IRD states that our customer authorized the conversion to an IRD. The item (front & back) was very clear and was processed without any exceptions.

The only concern I have is that the back of the imaged check contained two different BoFDs that appear to printed by the bank that converted the check to an IRD. If we had to return the check this would have been an issue (or we would just send the check back RAW to the Fed).

So it looks like, at least on a small scale, Check21 is here!

As noted, the item BLR describes is not a product of Check 21. It's an ARC, a check converted to an electronic entry under current NACHA rules.

They really p*** consumers off, but the current remedies are as John notes - the consumer has no choice other than changing vendors. If a bank is receiving complaints, the brochure cwilliams links is an excellent response. However, start your explanation to the consumer with the concept that her complaint is with the merchant, you cannot "fix" the problem.

NACHA has published a request for comment on a proposed rule that would give consumers an opportunity to "opt out" of ARC conversions. NACHA claims they thought merchants would voluntarily offer an opt out.