News

Consumer groups concerned about Check 21

October 28, 2004

Cincinnati Enquirer: Consumer groups claim that the Check Clearing for the 21st Century Act -- Check 21 for short -- will hurt customers in the long run with higher fees and more inconvenience.

The law, which took effect Oct. 28, allows banks to replace canceled checks with digital copies.

Jean Ann Fox, director of consumer protection for Consumers Union, the nonprofit publisher of Consumer Reports magazine, said the faster withdrawal of money from checking accounts will cause more bounced checks as consumers "float" payments while their deposited paychecks clear the banking system.

She also said banks will charge higher fees when consumers need to get official copies of certain checks to prove they made purchases.

Consumers Union in August asked all financial institutions to adopt seven policies to mitigate the adverse impacts on consumers of Check 21. Among them was to promise to return funds to a consumer checking account within 10 business days when something goes wrong with a check, to not charge a fee for a substitute check and to suspend bounced-check charges until Jan. 1.

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