Check 21 The Check Clearing for the 21st Century Act, better known as Check 21, was signed into law on October 28, 2003, and will be phased in over a period of time beginning on October 28, 2004. Check 21 is designed to make the check clearing system more efficient by converting paper checks to electronic images when deposited. The check images will then be electronically sent to the bank they are drawn on in order to complete the payment process. Currently the original paper checks are physically transported to the bank they are drawn on for payment. Frequently Asked Questions regarding Check 21: Q: What is Check 21? A: In a nutshell, Check 21 (the Check Clearing for the 21st Century Act) allows banks to replace original paper checks with “substitute checks” that are made from digital copies of the originals. Q: Why was Check 21 created? A: Check 21 was created to reduce the time, risks and costs associated with paper check processing. Currently, checks travel on trains, planes and automobiles during the clearing process. When Check 21 becomes effective, banks will be able to send digital images of checks electronically, eliminating the need to physically transport paper checks between banks. Check 21 will also reduce uncontrollable transportation delays that can be caused by weather or natural disasters. Q: What does Check 21 do? A: Check 21 will create a more efficient check processing system, without changing the way consumers write checks. It simply requires banks and customers to accept paper copies of their original checks called “substitute checks.” Q: What is a substitute check? A: A substitute check is a paper copy of the digital image of your original check—both front and back, with all endorsements—and is about the size of a business check. Check 21 legislation sets standards for quality and allows for substitute checks to be legal copies of the originals. All banks must accept the substitute check as they would the original document. Q: How will Check 21 impact me? A: If you receive your canceled checks with your statement, you may receive a mix of substitute checks and original checks. If you don’t receive your checks back today, you may not notice any change at all. Check processing will be faster with the implementation of Check 21. Funds may be removed from your account sooner than in today’s system, therefore there will be less “float time.” As always, make sure you have enough money in your account before writing a check. Q: Is Check 21 mandatory? A: Check 21 does not mandate electronic processing of digital check images. It simply makes it possible. For banks that choose to process checks manually, a substitute check will be made of the image, which will be processed as if it were the original. Q: Are substitute checks an acceptable proof of payment? A: Yes, everyone must accept substitute checks beginning October 28, 2004. Q: What happens to my original check? A: After taking a digital image, the bank may destroy your original check. If necessary, a substitute check may be created. Since substitute checks are legal copies of your original check, there is no need to save the original. Q: What if I need a copy of my canceled check? A: Contact F&M Bank and we will produce a copy for you. CHECK 21 DISCLOSURE NOTICE SUBSTITUTE CHECKS AND YOUR RIGHTS IMPORTANT INFORMATION ABOUT YOUR CHECKING ACCOUNT Q: What is a substitute check? A: 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 the 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. Q: What are my rights regarding substitute checks? A: 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. Q: How do I make a claim for a refund? A: 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: F&M Bank 21 East Main Street Galesburg, IL 61401 (309) 343-7141 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/or] the following information to help us identify the substitute check: (identifying information, for example the check number, the name of the person to whom you wrote the check, the amount of the check).