Another Check 21 Wrinkle

FYI

I just ran into another aspect of the Check 21 regulations that were implemented after 9/11.

Payees may now turn your payment check into an ACH debit. They then destroy your check; and it is never returned to your bank.

Not only can this complicate proving you paid a bill (ACH debit records do not include the payee's name, though the bank can with some effort go back through their ACH logs); but this also messes up downloads since Quicken can't match the ACH debit with a check register entry.

Nothing to be done about this. I just wanted to let others know about it.

Stephen

Reply to
The Streets
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Hmmm. That's not how I understood it. Nor does it match my experience. There are several vendors in my area that use ACH check conversion. It is done at point of sale. The physical check I write is scanned, and the check is not destroyed, but it is returned to me.

That is very different than Check 21, which as you stated was enacted in part because of the events of September 11th, 2001, in order to facilitate the processing of checks without needing an actual paper copy.

I googled a bank website and found these explanations:

" What is Check 21? The Check Clearing for the 21st Century Act, better known as Check 21, is a new federal law that went into effect on October 28, 2004. Check 21 establishes what is known as a "substitute check". A substitute check is a paper reproduction of an original check that contains an image of the front and back of the original check, is suitable for automated processing in the same manner as the original check, and meets other technical requirements. A

430 No such article

Hmmm. That's not how I understood it. Nor does it match my experience. There are several vendors in my area that use ACH check conversion. It is done at point of sale. The physical check I write is scanned, and the check is not destroyed, but it is returned to me.

That is very different than Check 21, which as you stated was enacted in part because of the events of September 11th, 2001, in order to facilitate the processing of checks without needing an actual paper copy.

I googled a bank website and found these explanations:

" What is Check 21? The Check Clearing for the 21st Century Act, better known as Check 21, is a new federal law that went into effect on October 28, 2004. Check 21 establishes what is known as a "substitute check". A substitute check is a paper reproduction of an original check that contains an image of the front and back of the original check, is suitable for automated processing in the same manner as the original check, and meets other technical requirements. A substitute check has the same legal standing as the original check and can be processed just like the original check. "

" How does Check 21 differ from ACH Check Conversion? Electronic check conversion (or e-check) is the process of converting a physical consumer check (at the point-of-sale, for example) to an ACH or other electronic transaction. Typically, the retailer takes your check and scans it for the encoded financial information after obtaining your authorization. The check is then stamped "void" and returned to you. Check

21 involves creating digital images of original checks, but they are processed under the same laws and regulations as paper checks."

So, although an ACH withdrawal processes electronically, and a bank is allowed to create an electronic 'substitute check' and destroy the one you wrote, the only similarity is that the process is electronic. The "substitute check" is not an ACH withdrawal. And an ACH withdrawal can be made with or without a physical check (either by prior authorization via phone/fax/online or at point-of-sale via physical check).

Check your bank statement. Most likely you will find that "On your monthly statement, a substitute check will be listed with your other checks; an e-check will be listed with other electronic funds transfers, such as automated debits for health club memberships or a payment with a utility company. "

Reply to
L

You may well be right that ACH conversion is not part of Check 21. I was going on the basis of what I was told by my bank representative.

Regardless, my ACH conversion was done for a mortgage payment. So I guess that the "point of sale" would be the mortgage servicing compay in Baltimore. And they definately have destroyed my original check are not planning to return it to me.

Haven't seen a monthly statement yet (I'm just going by the online transactions) but I'm quite sure that the ACH conversion will, as you say, look like other electronic debits. Hence the problem matching to transactions that that originated as checks.

Reply to
The Streets

I, too, would be concerned with a billing agent being able to convert a paper check into an electronic format without my permission, and without any copy of my physical check. I would be especially concerned if it were a mortgage check, or any other check where there might be a memo attached (ie. "extra principal payment" on a mortgage or "payment in full less disputed charge - see attached" on a credit card.)

I was unaware that such a conversion could be done without the express permission of the consumer.

Wait till you get your bank statement, tho. According the the information I googled, you are entitled to a copy of the image of your check. See if the bank gives it to you.

As to matching with Quicken, yeah, it will be a pain. Quicken will not automatically match without the download containing the check number. You will most likely have to match manually.

Reply to
L

What you find is that buried amongst all the advertising and other junk stuffed in the billing envelope was a notice that stated your mortgage/cable/store charge/whatever company will be doing ACH Check Conversion and if you don't want them to, you need to find another vendor...

Reply to
Clark W. Griswold, Jr.

My credit union and its system posts images of both sides of every check I write on a server that I can access, by check, from the secure portion of their web site. Id I need a "copy", I just print the image to PDF.

Reply to
RWEmerson

Right -- my bank does this also. But, with the ACH conversion process being used by the mortgage company, my bank never gets the check or a facsimile back. So, no online image.

Reply to
The Streets

Check the fine print on your bill. You may be able to get a copy of the check from the mortgage company.

Reply to
John

Right. That's what they have to do for Check21. The problem is that an ACH conversion is not Check21. The recipient of the check scans the account number and does what is effectively an ATM withdrawal fom your account. The bank never sees the check, so they can't scan it.

Reply to
Clark W. Griswold, Jr.

I found that Scholastic, the book company did that as well. If it included the check number, it wouldn't bother me. I complained to Scholastic and here was their reply.

Scholastic has recently implemented the electronic processing of checks (ARC). We have put notification of this change on the teacher and student order forms:

"When you pay by check you authorize us to process your payment electronically. Funds may be withdrawn from your account as soon as the same day we receive your payment. You will not receive your check back from your financial institution; however, the transaction will appear on your bank statement."

If you would prefer to have your checks processed in a way that will have your cancelled check returned to your bank, please submit your request in writing, including a voided check to:

Fax: 800-914-9150

OR

Mail: Scholastic Inc.

Attn. Credit and Collections Po Box 7503 Jefferson City, MO 65102

I think it's easier just to stop buying stuff from them.

Reply to
Steve P

"Steve P" wrote in news:MDIig.87994$IZ2.37886@dukeread07:

I am not sure what the big deal is about having a canceled check. If both you and the bank have a record of the transaction, then the creditor should as well. If they don't, it's up to them to explain why they can't match your payment with their credit.

I am much more annoyed with creditors that insist on receiving a check. Here in Fair Lawn, that is especially the municipal water company. Having to write quarterly checks for ~$30, putting it plus the stub each time in an envelop, affixing a stamp, and giving that to the mail person is just too much. I'd rather have Quicken do it, but they insist on a check and a stub .

Reply to
Han

Very good. People seem to like to say "there ought to be a law..." when they would get a much better reaction by just stop purchasing....

Reply to
Clark W. Griswold, Jr.

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There is one situation where a copy of the check is important, and that is where you put a memo of sorts on the check. This can happen when you make over/under payments on a loan. Say you wish to add an additional amount to the principle on your mortgage. OR, say you are disputing a charge for 'insurance' on a car loan. Suppose you are paying a contractor for work done at your home, and want the payment applied to specific invoices. Suppose you went to the doctor for tests, and s/he is trying to charge you for a visit for the time spent in giving you the results, and you wish your check to reflect and be applied ONLY to the initial consultation.

In all these cases, if the check is processes as an ACH debit, you DO NOT get a copy of your check. So, if your loan company/contractor/doctor takes you to court because you failed to pay a specific charge (perhaps they applied your payment to finance fees, or a disputed item - rather than to the specific items you knew you owed, and were attempting to pay), the consumer does not have a record of the check WITH THE MEMO detailing how the payment was to be applied.

As for your situation with the water company, did you know that Quicken DOES produce physical checks? While the number of Quicken checks I have copies of in my bank statement dwindles as more and more vendors use ACH, I can tell you from personal experience, that vendors not in 'the system' DO recieve actual, physical, checks. I suspect the problem with your water company is that they want you to return the payment stub they gave you. Quicken uses the account number you set up in the online payee as a memo field. You could most likely change that account to include not just your account number from the water company, but any "pertinent" info they include on the stub. I would be surprised if they could not match a Quicken check with that info.

Reply to
Lisa C

"Lisa C" wrote in news:KJcjg.205$ snipped-for-privacy@fe10.lga:

Then you are assuming "they" will look at the memo. That's a big assumption.

same as above.

Yes, that may be the case. However, I was led to believe that for an occasional $25-$30 check they will not change their SOP.

I have gone to authorizing many payees to withdraw the amount due from a checking account, or charge it to a credit card. Most of my credit card payments are thus the responsibility of the credit card company. I "just" have to make sure there is enough money ...

Reply to
Han

Couldn't care less whether 'they' look at the memo. The memo has legal value and serves a legal purpose. Again, it is only an issue where you are paying a value different than what is expected or the norm. If you are paying in full on a non-disputed item, have no specifications for where the payment is applied, then you are correct, ACH should not be an issue.

430 No such article

Couldn't care less whether 'they' look at the memo. The memo has legal value and serves a legal purpose. Again, it is only an issue where you are paying a value different than what is expected or the norm. If you are paying in full on a non-disputed item, have no specifications for where the payment is applied, then you are correct, ACH should not be an issue.

Reply to
Lisa C

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