Substitute Checks and Your Rights – Important Information about Consumer Checking and Money Market Accounts
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 law 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 The losses you may attempt to recover under this procedure may include the amount that was withdrawn from your account and fees that were charged as a result of the withdrawal (for example, bounced check fees).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 receive 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: American Bank, 4029 West Tilghman Street, Allentown PA 18104; or Phone: 610.366.1800 or Toll Free: 888.366.6622; or secured message sent through the "Secure Messages" function under Other Services when you sign on to AmericanBank Online,(AMBK.com),to view your account.
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 circ*mstances.
Your claim must include: (1) a description of why you have suffered a loss (for example, you think the amount withdrawn was incorrect); (2) an estimate of the amount of your loss; (3) an explanation of why the substitute check you received is insufficient to confirm that you suffered a loss; and (4) a copy of the substitute check or the following information to help us identify the substitute check: the check number, the amount of the check, the date of the check, the name of the person to whom you wrote the check, and the account number.
Rev. 02.23
FAQs
A substitute check is a special paper copy of the front and back of an original check. It may be slightly larger than the original check. Substitute checks are specially formatted so they can be processed as if they were original checks. The front of a substitute check should state: "This is a legal copy of your check.
What information must a consumer's claim on a substitute check contain? ›
Your claim must include: (1) a description of why you have suffered a loss (for example, you think the amount withdrawn was incorrect); (2) an estimate of the amount of your loss; (3) an explanation of why the substitute check you received is insufficient to confirm that you suffered a loss; and (4) a copy of the ...
Can a bank refuse a substitute check? ›
Do we have to accept Substitute Checks? YES! Everyone, including banks, credit unions, paying customers, depositing customers, consumers, corporations, the Fed, must accept legitimate substitute check for payment.
Can a substitute check be used as proof of payment? ›
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.
What is a true statement about a substitute check? ›
A substitute check is the legal equivalent of the original check and includes all the information contained on the original check.
What does a substitute check include? ›
The substitute check is a paper reproduction of the original check that must (1) contain an image of the front and back of the original check; (2) bear a MICR line containing all the information appearing on the MICR line of the original check; (3) conform, in paper stock, dimension, and otherwise, with generally ...
What is the special claim for substitute check? ›
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.
Each time a consumer requests an original or a copy of a check and gets a substitute check, the bank shall provide the disclosure at the time of request, if feasible, and, if not, at the time the substitute check is provided to the consumer.
Why would I get a substitute check? ›
You may receive substitute checks in other limited circ*mstances. For example, your bank may give you a substitute check if you ask to have a particular canceled check back to prove a payment. Also, your bank might provide a substitute check to you when returning a “bounced” check that you deposited into your account.
Why do banks issue substitute checks? ›
The practice of using substitute checks in the check clearing process is known as check truncation. It allows for significant time savings because banks are no longer required to store and transmit the original physical copies of checks, which might be easily lost or damaged.
A substitute check (also called an Image Replacement Document or IRD) is a negotiable instrument that is a digital reproduction of an original paper check.
Can no one refuse to accept a substitute check as proof of payment? ›
No one can refuse to take the substitute check, which is legally same as the original check. Customers cannot insist on getting the orginal check back. The image have the same legal effect as the original check.
What is the best way to prove payment? ›
The most common method of proving a purchase is through a sales receipt. A receipt can be an invoice or another document that shows information about the purchase. The date, amount paid, and description of the item purchased are included. Receipts should also show the name of the purchaser and the seller's address.
What documents are considered proof of payment? ›
Proof of Payment
Photocopy of a cancelled check (front and back) Credit card sales slip. Monthly credit card statement (all personal information not pertaining to the purchase should be redacted)
Do all banks have to convert paper checks to substitute checks? ›
Under Check 21, any bank may create a special paper copy—called a “substitute check”—using images of the front and back of an original check. If any bank in the process requires a paper check, another bank can send a substitute check in place of the original.
Am I supposed to deposit a substitute check? ›
The Law – Check 21 Act
However, a properly prepared substitute check is the legal equivalent of the original check. Therefore, a paying bank must receive a legally equivalent substitute check just as it would the original check.
What is the purpose of a substitute check? ›
Understanding Substitute Checks
It allows for significant time savings because banks are no longer required to store and transmit the original physical copies of checks, which might be easily lost or damaged. Today, substituted checks created by banks are considered legally valid forms of payment.
Why did I receive a substitute check? ›
You may receive substitute checks in other limited circ*mstances. For example, your bank may give you a substitute check if you ask to have a particular canceled check back to prove a payment. Also, your bank might provide a substitute check to you when returning a “bounced” check that you deposited into your account.
Why was I sent 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.
