A new law takes affect in two months that will help discover check fraud faster. The law is called Check 21 and it allows stores to take digital images of your check and turn it into your bank. The bank must then accept it.
What this does, is allow banks to speed up the check clearing process instead of physically transporting checks from bank to bank. In other words, a check that takes four days to clear could take two days.
Let's say you are writing a check at a business like Wal-Mart. It has an automated clearing house system that takes a digital image of your check. Your original check is given back to you and that image or substitute check is sent to your bank.
By law, the bank is required to take the substitute check as a form of payment.
American State Bank Vice President Greg Jones says that this is a way to help banks decrease paper use, decrease fraud, and help the consumer. "In time, many of the stores will begin doing the scanning. Just a like a few of them are now. In a few months or years probably, a lot of the stores will be doing that. A lot of checks, instead of transporting them physically, will be transferred images to your bank," said Jones.
Jones says that bigger banks like Bank of America and Wells Fargo are already using an electronic processing system. Stores like Walmart, Old Navy and Fast Stop Convenient Stores electronically process checks.
The Feds passed the check processing law last year, but takes into effect October 28th. Banks are the only entities affected by this law, it doesn't change the way you spend your money. However, you must make sure you have money in your account before writing checks because they will clear quicker than they have before.