Here's how it works:
Once a check is deposited, financial institutions
can create an electronic image of the check and transmit the image
called a substitute check to another financial institution for processing.
Check 21 provides the rules and guidelines for the use of substitute
checks and provides protections to those who may receive a substitute
check.
Substitute checks can be used for record-keeping
or proof of payment the same way as the original check. Check 21
provides a special refund procedure (called "expedited re-credit"),
if people receive a substitute check and there is an issue or error
with the account. Each financial institution will provide information
on how this new refund procedure works.
Here's an example that might be seen in statements.
In most cases, the actual image of the check design will only be
shown in black and white to make it easier to read the written portions of
the check after the check imaging process.
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