I am working with our Deposit Operations team to enhance their Operating Procedures and need some help on substitute checks. We do not provide original checks or copies of the checks with our statements. We are entirely online, so when we need a copy of a check, we print a copy from our check processor. Can someone help me understand when we would issue a substitute check to a customer? We redeposit items a second time if they are returned the first time for any reason other than stop payment or closed account, Thank You.

"Can someone help me understand when we would issue a substitute check to a customer? "

When a customer of the bank requests an original check or a copy of a check and receives a substitute check.

"We redeposit items a second time if they are returned the first time for any reason other than stop payment or closed account"

You mean returned deposited items? I hope only with a proper hold harmless agreement.

"When a customer of the bank requests an original check or a copy of a check and receives a substitute check."

We have never had a customer request an original copy, therefore we print copies of all checks off a website provided by our check processor. In this instance, how would we know that the check is a substitute check?

https://en.wikipedia.org/wiki/Substitute_checks_in_the_United_States

They are more than just a copy that you usually print off from your on-line banking system. They are an actual substitute for the original negotiable item. A customer might need them in a lawsuit, etc. for evidence.

Yes, I understand that piece. When a customer requests a check we are not printing them from an online banking system, but the online website provided by our check processor. I think my confusion is when a substitute check needs to be provided. Anytime a customer requests a check, should we be providing an IRD versus just a printed copy.

That is really a business decision. Most likely depends on why they are asking. You also need to hand them the disclosure under 229.57(b)(2) if you do.

I do have the disclosure but was hung up on when we would provide the IRD. Thanks for your feedback.