Automatic checking hits Brookings

Amber Armstrong

Amber Armstrong

Money will now be deducted from your checking account faster due to a recently passed law.

A new law called Check Clearing for the 21st Century, or Check 21, clears checks faster by sending substitute checks to banks around the nation.

A substitute check is a slightly larger copy of the front and back of the original check. The new law, which went into effect Oct. 28, states that these electronic checks have the same legal equivalent of a paper check.

The law was passed in response to problems with checks after the Sept. 11 terrorist attacks when accounts were stalled around the country because checks were not being transported because planes were stalled. Businesses did not get paid on time and check processing was backed up. In order to prevent this from happening again, President Bush signed a bill that would allow checks to be sent electronically to almost any bank in the nation.

The old method of transporting paper checks sometimes took up to a week or more, now it only takes a couple days for a check to be cleared. With the new system, the first bank that receives a paper check sends an electronic image of the check. It then holds onto the original paper check.

Using electronic means of sending check information also helps cut down fraud. The faster clearing time will eliminate risks. It will also be easier to catch the bad check writers before too much damage is caused. Service Manager of Wells Fargo, Linda Friedrich said there is a significant amount of fraud in this area.

“There is a lot of fraud in the Midwest mainly because we are so trusting. We will believe anything anybody tells us,” Friedrich said.

According to Friedrich, there have not been any major problems associated with the new check system. She said the main problem is people who are unaware of the new writing checks before their paycheck comes through.

“My advice is, don’t write the check until you have the money,” Friedrich said.

The law does not require banks to accept or send substitute checks. If a bank is unable to accept or send electronic checks or wants to continue receiving paper checks, substitute checks can be delivered to these institutions.