Imagine having a crook cash a bogus $2,500 check on your account, and not being able to legally do anything about it.

     Or imagine being charged twice by your bank for the same $1,000 check and being told you weren't entitled to a refund because you hadn't requested the right type of check copy in advance.

     The idea behind Check 21 is to speed the processing of checks and relieve the burden to banks of handling and moving around reams of paper checks and records.

     Instead of moving paper checks between banks, under Check 21, a special type of electronic copy known as a "substitute check" will be used instead.

     What becomes of your original paper check? In the vast majority of cases, it will no longer be returned to you, but will be destroyed by a bank or a check processing center handling it.

     Instead of receiving your cancelled checks every month, you will henceforth most likely receive either a copy (which may or may not be a legal "substitute check") or simply a printed summary of your transactions.

     This new electronic system will save banks lots of money, but it has few advantages for checking account holders and quite a few dangers and risks.

     One of the first changes you are likely to notice is that henceforth you will almost always be debited for checks that you write within 24 hours.

     Because your checks will now move with electronic-speed, there will be virtually no more float.

     So from now on, be sure you always have enough funds in your account to cover any checks before you write them.

     Yes, you read that right. The greatest danger of Check 21 is that if you are double-charged for a check or if someone forges a check on your account, you have no legal way to get your money back unless you tell your bank in advance to send you a "substitute check" for each and every check written on your account.

     You see under Check 21, your bank can send you a facsimile copy, "truncated check" copies, or simply a summary of your financial transactions. Under Check 21 none of these copies or reports entitles you to get back embezzled funds or erroneously-billed charges.

     So tell your bank NOW you want "substitute checks" for each and every check written on your account if they can't provide your original checks. Make sure to get a written acknowledgement. Then the bank is required to refund the first $2,500 in erroneous charges and debits within 10 days, and the rest of your money due (if any) later.

     Under no circumstances agree to accept "truncated checks."

     Unfortunately, double-charging and overdraft fees are quite possible under Check 21, since it will be easy for banks to accidentally debit you for both your original paper check and for the electronically-transmitted substitute check, particularly when the system is just getting started.

     So as an added precaution during the next few months, make sure and check your account balance at least several times a week and always keep enough money in your account to cover your checks.

     For more information about Check 21 and your rights under this new banking law, contact:

Consumers Union West Coast Office
1535 Mission Street
San Francisco, CA 94103

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