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Check 21-Enabled Services Frequently Asked Questions

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Check 21 Frequently Asked Questions

The following Frequently Asked Questions (FAQs) relate to our FedForward®, FedReturn®; and FedReceipt® services.

Q: What if my financial institution deposits duplicate substitute checks or duplicate items in an ANSI X9.37 image cash/return letter file?

A: Financial institutions should contact Check Adjustments Customer Support Center at (877) 372-2457 with the following information:

  • Date(s)
  • Amount
  • Total number of items involved
  • Detail listing of items involved
  • Reference number

Financial institutions should not submit an adjustment request for debit entry. The Federal Reserve will handle any adjustment requests submitted by the paying banks involved (for example PAID). Every attempt will be made to include the reference number provided above when resolving cases to the originator of the duplicate items.

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Q: What if my financial institution receives for presentment a duplicate substitute check/ image in a FedReceipt or FedReceipt Plus file?

A: Financial institutions may submit a PAID adjustment request. When using this adjustment type an immediate provisional entry will be passed if the required documentation is provided and the request is submitted in a timely manner. Alternatively, institutions may submit a Check 21 Warranty/Indemnity Claim (WIC) or an Expedited Recredit (EXRC) request, if the associated requirements are met. However, provisional entries are not provided on WIC and EXRC requests. Please refer to the Quick Reference Guide (QRG) for specific requirements for these adjustment types. The QRG is located at http://www.frbservices.org/operations/checkadjustments/check_adjustment_error_types.html

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Q: What if an item is charged to my financial institution as a Non-Conforming Image (NCI)?

A: Items may be rejected by the Federal Reserve because (1) they fail our image quality standards, (2) are qualified to invalid routing numbers, or (3) are ineligible for image clearing (for example Savings Bonds or foreign items). Financial institutions should take the appropriate action to correct the reported issue and re-introduce the item into the collection stream for processing. For example, if an item was rejected because it did not meet our image quality standards, institutions should re-image the item and re-submit the item in another image cash/return letter (ICL) or deposit the original paper check in a regular cash/return letter.

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Q: What if my financial institution receives an illegible substitute check?

A: If an item fails to meet legal equivalence requirements financial institutions may request credit for a non-cash item (NCH). Institutions using this adjustment type will receive immediate provisional entry if the required documentation and timeframes are met. Alternatively, customers may submit a request for information for an Original or Sufficient Copy Request (OSCR) to request the original item or a sufficient copy of an original item.

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Q: Why can't I see the usual indorsements on the rear image of checks in the FedReceipt file?

A: In the paper check world, financial institution's indorsements appear as printed ink characters on the back of a check. In the post-Check 21 world, the paper is converted to an image of the item and may later be reconverted into a Substitute Check. When the item is an image there is no paper on which to print an indorsement, so at that stage financial institutions add an electronic indorsement to the collection of data records that represents the check.

The process of converting a paper check to an electronic item creates a collection of data records for each item that includes (see ANSI X9.37 (Off-site Link) for a complete description):

  • The MICR line data of the check
  • Front image
  • Rear image
  • Electronic Indorsements

When the Bank of First Deposit (BOFD) converts a paper check to an electronic item, it may include an electronic BOFD indorsement with each item converted. While a BOFD's physical indorsement is visible on the rear image, if the image is taken prior to indorsement, the BOFD indorsement will not be visible on the image of the back of the item. The physical ink BOFD indorsement is not required if an electronic indorsement is present.

Each subsequent financial institution that processes an electronic item adds its indorsement electronically to the data records for that item. These electronic indorsements are not visible on the rear image of the item in a FedReceipt file.

Should you need to return such an item, you may do so as an Unqualified Mixed Return. If you are a FedReturn institution, you can qualify the item to the Federal Reserve Bank you are depositing with. The Federal Reserve will handle the item as a raw return (raw return fee assessed). 

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Q: How can I see the electronic indorsements in a Check 21 FedReceipt file?

A: Your financial institution's software vendor should have a means for your staff to view electronic indorsements by looking at records other than the image record in the FedReceipt file. Each electronic indorsement is a record in the FedReceipt file that follows the ANSI X9.37 (Off-site Link) specifications available from www.X9.org (Off-site Link).

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Q: Are electronic indorsements visible on substitute checks?

A: Yes. Any software that prints substitute checks is required to print the electronic indorsements. A substitute check includes the front and rear images of the check which is a picture of the check when it was converted to an electronic item. Any financial institution that processed the imaged item added an electronic indorsement. When the imaged item is reconverted into a substitute check, these electronic indorsements are printed on top of the rear image of the check as an overlay.

When reviewing a sample substitute check (PDF), the standard ink indorsements are printed from left to right or horizontally on the substitute check. The electronic indorsements are overlaid on the substitute check and appear vertically or from top to bottom. Note that this substitute check has the BOFD's indorsement on the item twice; once from the image of the physical ink indorsement on the paper item and again as an overlay printing of the electronic indorsement. Other electronic, subsequent processor indorsements appear at the right end of the substitute check.

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Q: Do electronic indorsements meet legal requirements?

A: Yes. Whether printed on a substitute check, or as an electronic record in an ANSI X9.37 FedReceipt file, an electronic indorsement has the same legal effect as a printed indorsement on a paper check. The legal basis of electronic indorsements is founded in Regulations J and CC as well as the Federal Reserve's Operating Circular 3 and legal agreements between the Federal Reserve Banks and financial institutions subscribing to services such as FedForward, FedReturns and FedReceipt. Note that electronic Bank of First Deposit indorsements printed on a substitute check are not required to have the BOFD's name printed on the indorsement, as required for paper checks.

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