Substitute checks and your rights
Commonly referred to as “Check 21,” the Check Clearing for the 21st Century Act, is a federal law designed to streamline check processing between financial institutions. The biggest impact for our customers is the introduction of “substitute checks,” a legal document described below.
As you read about “substitute checks” please keep in mind that we do not currently send any check information electronically. If you receive a “substitute check,” it means somewhere else your check was converted to a “substitute check.” If we receive a “substitute check” drawn on your account, we treat it just like a normal paper check.
Below is important information about your rights regarding “substitute checks.” If you have any questions, please visit one of our offices, or call 800-246-2009 to speak with a branch officer.
What is a substitute check?
To make check processing faster, federal law permits banks to replace original checks with “substitute checks.” These checks are similar in size to original checks with a slightly reduced image of the front and back of the original check.
The front of a substitute check states: “This is a legal copy of your check. You can use it the same way you would use the original check.” You may use a substitute check as proof of payment just like the original check.
Some or all of the checks that you receive back from us may be substitute checks. This notice describes rights you have when you receive substitute checks from us. The rights in this notice do not apply to original checks or to electronic debits to your account. However, you have rights under other laws with respect to those transactions.
What are my rights regarding substitute checks?
In certain cases, federal law provides a special procedure that allows you to request a refund for losses you suffer if a substitute check is posted to your account (for example, if you think that we withdrew the wrong amount from your account or that we withdrew money from your account more than once for the same check). The losses you may attempt to recover under this procedure may include the amount that was withdrawn from your account and fees that were charged as a result of the withdrawal (for example, bounced check fees).
The amount of your refund under this procedure is limited to the amount of your loss or the amount of the substitute check, whichever is less. You also are entitled to interest on the amount of your refund if your account is an interest-bearing account. If your loss exceeds the amount of the substitute check, you may be able to recover additional amounts under other law.
If you use this procedure, you may receive up to $2,500 of your refund (plus interest if your account earns interest) within 10 business days after we received your claim and the remainder of your refund (plus interest if your account earns interest) not later than 45 calendar days after we received your claim.
We may reverse the refund (including any interest on the refund) if we later are able to demonstrate that the substitute check was correctly posted to your account.
How do I make a claim for a refund?
If you believe that you have suffered a loss relating to a substitute check that you received and that was posted to your account, please contact us at the Electronic Banking Department, The Savings Bank, PO Box 30, Wakefield, MA 01880. You must contact us within 40 calendar days of the date that we mailed (or otherwise delivered by a means to which you agreed) the substitute check in question or the account statement showing that the substitute check was posted to your account, whichever is later.
We will extend this time period if you were not able to make a timely claim because of extraordinary circumstances.
Your claim must include:
- A description of why you have suffered a loss (for example, you think the amount withdrawn was incorrect);
- An estimate of the amount of your loss;
- An explanation of why the substitute check you received is insufficient to confirm that you suffered a loss; and
- A copy of the substitute check and the following information to help us identify the substitute check (for example, the check number, the name of the person to whom you wrote the check, and the amount of the check).
Conveying checks electronically reduces the time it takes for a check you write to someone on the West Coast (or anywhere else in the country) to reach us from days to hours. This effectively eliminates “float” time, making it critical to make sure funds are available in your account to cover checks when you write them.