Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA.
Yes, you may return the paper check to the customer, provided that you retain a copy of the check for seven years. The Uniform Commercial Code encourages a seven-year retention period for checks, but it permits banks to return (or destroy) paper checks if they “maintain the capacity to furnish legible copies of the items until the expiration of 7 years after receipt of the items.” If you retain an electronic copy of this check, both Illinois and federal law would treat the electronic copy the same as the paper check.
If you return the check to the customer, we do think it would be prudent to indicate on the check that it has been paid, such as by stamping it “paid.”
For resources related to our guidance, please see:
-
Illinois Uniform Commercial Code, 810 ILCS 5/4-406(a) (“A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the customer to identify the items paid. The statement of account provides sufficient information if the item is described by item number, amount, and date of payment.”)
-
Illinois Uniform Commercial Code, 810 ILCS 5/4-406(b) (“If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of 7 years after receipt of the items.”)
-
Electronic Signatures in Global and National Commerce (ESIGN) Act, 15 USC 7001(a)(1) (“A signature, contract, or other record . . . may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”)
-
Electronic Commerce Security Act, 5 ILCS 175/5-110 (“Information, records, and signatures shall not be denied legal effect, validity, or enforceability solely on the grounds that they are in electronic form.”)
-
Financial Institutions Electronic Documents and Digital Signature Act, 205 ILCS 705/10(a) (“If in the regular course of business, a financial institution possesses, records, or generates any document, representation, image, substitute check, reproduction, or combination thereof . . . that accurately reproduces, comprises, or records the agreement, transaction, act, occurrence, or event . . . [it] shall have the same force and effect under the laws of this State as one comprised, recorded, or created on paper or other tangible form by writing, typing, printing, or similar means.”)