My bank began charging me for check imaging (long story). Previously, they came with my statement. I see from here (#2 and #3) that check images are not legally equivalent to canceled checks anyway. Among other items, they lack a required notice[sup]1[/sup] as well as magnetic ink. Here, we will call the legal equivalents, “Substitute Checks” (though technically subs. checks don’t require the notice).
Substitute checks and check images involve different levels of obligation for the bank and protection for the consumer. See Q21-25 from the Fed’s FAQ on Check21.
GD discussion of Check21 from 2004 is here. Much of it involves a discussion of float, but 4 years later it seems that Check21 had additional consequences for the consumer.
So is check imaging worth anything? Some banks provide substitute checks with every statement: is this a valuable service? Even then, if the check is electronically converted by a utility or credit card company, the bank will just provide a line-item.
Does a line item on a bank statement constitute proof of payment? What about a check image? A substitute check would provide legal proof, but I suspect that getting the bank to cough one up could involve delay and effort.
Check images also permit one to discover bank errors. There may be other advantages.
Some banks provide check images online for a limited period of time.
FWIW, I can’t remember the last time I needed to prove that I made a payment, but I understand that others have differing experiences.
[sup]1[/sup]Required legend: “This is a legal copy of your check. You can use it the same way you would use the original check.”
Do you know whether a check image would be sufficient proof? Or do you need something with the message, “This is a legal copy of your check. You can use it the same way you would use the original check.”?
So far all I have had to do is enlarge those tiny little check copies that come with my bank statement and submit them. The insurance company has been fine with it.
The style of personal financial management that I use requires it. I don’t sit around balancing my checkbook once a week because computers are better at math than I am and I don’t write many checks anyway. However, once a month or so, when I am scanning my debits, I will see something like a check for $781.32. I need to know what that is if it doesn’t ring a bell so I just pull up the image in a couple of clicks. I have never had one be wrong but the Bank of America images the front and back well so I think that would be invaluable if there was a real problem.
The absolute best thing I ever had in my Divorce was all the cancelled checks proving that I had paid over $40,000 of my then wife’s debts, over half of it to her mother and step-father for the mortgage on her house. I had them cold because of it. “Here’s the checks, here’s the proof. Everything you’ve said is a LIE.”
Now my bank doesn’t perform that service any longer.
Interestingly, I understand that BofA and Wells Fargo limit their online check retention to 7 years. Under certain legal circumstances, I guess that may be insufficient.
I think that I would prefer that the bank deliver my check images to me automatically, thanks much. Seven year retention is good enough in most cases but possibly disastrous in a few.
MfM: Does a line item constitute proof?
Keeve: I can’t imagine how. All it says is that the bank paid $123.45 for Check #6789. You need the image to show who it was written to, and who endorsed it.
Ok. ACH Debit or electronic check conversion may be a separate matter. One of my statements shows an entry from the phone company (with the receiver identified by name) along with the check number and date cashed. I wonder whether this practice could lead to consumer difficulties, assuming it became widespread. There is no image available at the bank’s website, btw. Methinks I better take care to keep my checkbook legible, given that I may never see the check or check image again.
I’ll note that the image online isn’t always especially clear, especially with regards to the back of the check. But there is little to be done about that, AFAIK.
I’ve never had a bank return my cheques to me, or offer any form of imaging. When the cheque is presented and cleared, it shows up on my statement. If I need to recall the details of the cheque, I just refer to the cheque butt.
I googled “Proof of Payment”. These sites made explicit demands for photocopies of both sides of the cancelled check. The request does not appear unusual.
Substitute checks would be accepted, since they include info from both sides. But many banks do not provide the back side in their image statement. And the online version may only be available for 7 years or another limited period.
Furthermore, “Federal law does not require a bank to provide a substitute check to the consumer even if the consumer demands it.”, although states like Massachusetts require banks to give consumers cancelled checks free of charge.
I wonder what contract law says. I wonder whether any bank commits itself to providing substitute checks on demand and indefinitely, if they don’t already include them in their statements.
My employer requires me to reimburse them for certain expenses by personal check. If I want to deduct them from my taxes, I need copies of the cancelled checks since I don’t have any other proof of payment.
This site suggests that ACH transfer (electronic conversion) will become more prominent: using canceled checks as proof of payment will become rarer.
In cases of fraud or error, you are limited to $50 liability if you notify the bank within 2 days. Between 2 and 60 days, you can owe $500. After that, the sky is the limit.
You can’t stop payment on an automatic debit. And there does not seem to be a required dispute resolution mechanism in place.
Via google, I could not find a discussion of illegal employee reimbursement schemes and check imaging. Thus for the moment I suspect that most organizations will accept check images and not demand to see a copy of both sides of the check, with notable exceptions. There’s an obvious vulnerability though, and I wouldn’t be surprised if some find themselves in Catch22 situations over the next few years.
I understand that consumer groups opposed Check21 when it was passed by the Republican-controlled Congress in 2003. Then again, an April 2007 report to Congress by the Federal Reserve found few complaints. Those that existed tended to relate to check conversion (ACH), which was actually not part of the 2003 legislation. The strings “cancel” (as in canceled checks) and “proof” (as in proof of payment) did not appear in the document.
PDF!: http://www.federalreserve.gov/boarddocs/RptCongress/check21/check21.pdf /PDF!
Hmmm…I just wrote a check to a famous person (for his seats at Fenway Park) and I assumed that I’d get a cancelled check (with his autograph on it), if I wanted one, simply by requesting the check from my bank, which usually mails me photocopies. Am I reading this thread correctly to say that my bank will tell me, “No can do”? Bummer.
Not necessarily. Many checks are not “truncated”: so the original check is available. If they are “truncated” into a substitute check, then a photocopy of the back of the check will be available from your bank.
It is highly unlikely that the celebrity will use “conversion” to ACH transfer. But if he was a utility company and he did that, then he would retain the paper check himself, and there would be no substitute check produced.
If I understand it correctly, if there’s an error with a electronic check conversion, you have to take the matter up with the utility company.