CHECK 21

In October, Congress passed and the President signed into law CHECK 21. This paved the way for the next advancements in check processing and established a legal basis for an electronic form of check. In October, 2004, mandatory acceptance of this new digital check will be required. All banks will accept a digital image to clear checks, making the process much faster and reducing check fraud.

As you might guess, meeting the requirements of this new format will involve changes to Home Federal's process and as we establish a timetable and plan for addressing this issue we will notify you. At this time you will experience very little if any change and your cancelled checks will continue to be returned to you in your monthly statement as always. But as this new process evolves, it will become necessary to adjust your account to accept the new law and requirements. Basically, the law establishes the digital image and requires that image to be used in place of your hand written check. The bank of first deposit may capture the digital image of your check as it is being processed and your hand written check will no longer exist. Since the check is destroyed, it can never be returned to you. Initially, we anticipate a paper copy of the front of your now digital check will be produced by us for you and included in your statement. The good news is that the law provides for access to a front and back copy of the legal digital image should you need it in the future and that legal image will be captured and stored by your bank, the Federal Reserve, and other processing agents. These changes will not happen all at once, and we will have time to prepare and notify you of the new system. We intend to continue to offer you the best checking account available and maintain the customer service you deserve. So please feel free to call or visit our offices anytime and our staff will be glad to update you on the process as we go along.

Electronic Check Presentment

When is your check not a check?

If you are currently paying your phone bill by check you may have already noticed that you don't get your cancelled check returned to you. Many customers have called and asked why and we have explained that this is a form of electronic check conversion. Additionally, you may have gone to a grocery store or gas station, written a check and had the check returned to you by the cashier. This too is a form of electronic check presentment, known as point of purchase. In the first example you sent your payment through the U.S. Mail or delivered it to a drop box. Through a process called ARC, the check can be converted to an electronic format. When this is done, the check itself is destroyed by the originator of the electronic format which could be the company the check was made to or the bank of first deposit. This originator must keep an image of the check for a period of two years. Any company that uses this process must notify you and most will do that on your monthly bill or statement. Other companies will transform your check at the point of purchase ( like at the grocery store ) into an ACH electronic item and hand you back your check.

What if you don't want your check to be used for electronic check conversion? If you don't want to have your check converted you may have to provide some other source of payment ( for example, cash debit card or credit card ). We have additional information on this process in our office and will be glad to share it with you.

There are some things you will want to remember before you agree to electronic check conversion:

Ask yourself; do I understand that the information from my check will be used to make an electronic payment from my account?

Do I have enough money in my account to cover the payment?

Before you leave the store, you should ask yourself:

Did I have the receipt?

Does the amount on the receipt match the amount of my purchases?

Was my check voided and returned to me?

When you receive your statement from Home Federal, you should:

Make sure that the charges on your statement match your records.

Contact us immediately if you notice a problem.