When A Check Is Not A Check
Suppose you’re at a store making a purchase and decide to pay by check — at least, that’s what you believe you are doing. The clerk asks you for a check that is completely filled out, partially filled out, or even blank. The clerk then runs the check through a machine and hands the voided check back to you with your receipt.
What just happened? Did you pay by check?
Why did the clerk return the check to you?
The answer is, you just experienced electronic check conversion.
What is electronic check conversion?
Electronic check conversion is a process in which your check is used as a source of information — for the check number, your account number, and the number that identifies your financial institution. The information is then used to make a one-time electronic fund transfer. The check itself is not the method of payment.
How will you know that your check is being used for electronic check conversion?
When you provide a check, you must be given notice that information from your check will be used to make an electronic payment from your account. The notice is required by the federal law that applies to electronic fund transfers, the Electronic Fund Transfer Act and the Federal Reserve Board’s Regulation E. Notice may be provided in different ways. For example, a merchant may post a sign at the register or may give you written notice that you’ll be asked to sign.
What are some of the differences?
Your electronic transaction may be processed faster than a check. Be sure you have enough money in your account at the time you make the purchase. Also, you have different consumer rights with an electronic check conversion transaction than when you use your check as payment. For example, you have the right to an investigation by your credit union when an error occurs.
Before you agree to electronic check conversion, you should 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 receive a receipt?
- Does the amount on the receipt match the amount of my purchase?
- Was my check returned to me and voided?
When you receive your credit union statement, you should:
- Make sure that the charges on your statement match your records
- Contact your credit union right away if you notice a problem.
This information was excerpted from Federal Reserve resources on electronic check conversion.
Visit their web-site at www.federalreserve.gov
for more information!