Suppose you’re at a store making a purchase and decide to
pay by check - at least, that’s what you believe you’re 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 where 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 payment
from your account - an electronic fund transfer. The check itself
is not the method of payment.
How will I know that my check is being used for electronic
check conversion?
When you provide your 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 a written notice
that you’ll be asked to sign.
What are some of the differences between electronic check
conversion and using my check as payment?
* 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.
* You have different consumer rights with an electronic check
conversion transaction than when you use your check as payment.
For example, with electronic check conversion, you have the right
to an investigation by your financial institution when an error
occurs.
What are my rights in electronic check conversion transactions?
* When you provide a check, you have the right to a notice telling
you that information from the check will be used to make an
electronic payment from your account.
* When you provide your check, you have the right to a notice
telling you of any fee that the merchant will collect from your
account electronically if you do not have enough money in your
account to cover the transaction. This fee is similar to a
“bounced check” fee.
* You have the right to receive a receipt when you make a purchase
at a store. The receipt will contain information about the
transaction, including:
* Date
* Amount
* Location
* Name of Merchant
* You have the right to have this same information included as
part of the regular account statement from your financial
institution.
* You have the right to ask your financial institution to
investigate any electronic fund transfers from your account that
you believe are unauthorized or incorrect. What should I do if I have a problem with an electronic check
conversion transaction?
Always review your regular account statement from your financial
institution. You should immediately contact your financial
institution if you see a problem. Were you charged the wrong
amount? Were you charged twice for the same transaction? You have
only 60 days (from the date your statement was sent) to tell the
financial institution about the problem. Depending on the
circumstances, the financial institution may take up to 45 days
from the time you notify it to complete its investigation.
With electronic check conversion, may I use the same check more
than once?
No. An electronic check conversion transaction is a one-time
electronic payment from your account. If you were to use the same
check for more than one transaction and you had a problem with one
of the transactions, your financial institution might have
difficulty investigating the problem because the same check number
would appear more than once on your statement. Can electronic check conversion occur if I mail a check to pay
a bill?
Yes. For example, let’s assume that each time you get your
insurance bill there is a notice. It tells you that when you mail
a check, information from that check will be used to make an
electronic payment from your account. If you then send a check,
you have agreed to electronic check conversion. Unlike what
happens when you make a purchase at a store, however, you won’t
receive a receipt. Your check won’t be returned to you with your
account statement from your financial institution because the
transaction was processed as an electronic fund transfer, not as a
check transaction. As with electronic check conversions in stores,
be sure you have enough money in your account when you mail your
check, keep records of your payments, and check your account
statements from your financial institution to make sure the
amounts charged are correct.
What if I don’t want my check to be used for electronic check
conversion?
If you don’t want your check to be used for electronic check
conversion, you may have to provide another form of payment (for
example, cash, debit card, or credit card).
Where can I file a complaint?
Contact:
Federal Trade Commission
Consumer Response Center
600 Pennsylvania Ave., NW
Washington, D.C. 20580 877-FTC-HELP - toll free
(877-382-4357)
Equal Housing Lender.