Electronic Check Conversion

Like other public utilities, LADWP processes check payments electronically. Not only does this method streamline payment processing, but it also offers customers greater security, safety and privacy. With electronic check conversion, your bank account will be debited in the amount of your check, as early as the same day we receive payment. The transaction will appear on your bank statement as an electronic funds transfer.

What is it and how does it work?

Electronic check conversion is a type of payment process. Your check is scanned for information - for the check number, your account number, and the financial institution's routing number - along with an image of the check itself on some occasions. This information is then used to make a one-time electronic transfer from your account. The transaction is approved or declined, just like the process for a credit card transaction. You then authorize the transaction by signing a receipt. Electronic check conversion converts a traditional paper check into an electronic item at the point-of-sale, and processes it through the Federal Reserve's Automated Clearing House (ACH) network. The check itself is not the method of payment.

There are two types of electronic check conversion transactions that you may experience, “Point of Purchase (POP)” and “Accounts Receivable Entry (ARC)”.

A “Point of Purchase (POP)” transaction occurs when you provide your check in person at a merchant and the merchant uses information from your check to make an electronic debit from your account. The merchant will normally run the check through a machine and hand the voided check back to you with your receipt. When this occurs, the merchant must notify you that information from your check will be used to make an electronic payment from your account. 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 will be asked to sign. If you do not want your check to be converted to an electronic debit, you must refuse to allow the merchant to convert your check and you may have to provide another form of payment (for example: cash, debit card, or credit card).

An “Accounts Receivable Entry (ARC)” transaction occurs when you mail a payment to a biller like LADWP and the biller once again uses information from your check to make an electronic debit from your account. However, prior to receiving your check, the biller must in some manner provide you a notice telling you of their intentions to convert your check to an electronic item. The biller may have put the notice on your statement. The biller may have sent a statement stuffer explaining the new way of handling your check and refer you to their website which includes web links on electronic check conversion. The biller is required to destroy the check to prevent the check from being presented for payment again. Under the ACH rules, the biller is required to keep a copy of your check for 2 years from the day the electronic item posts to your account.

Consumers benefit from the use of electronic check conversion in a variety of ways:

• Your privacy is protected due to the elimination of paper checks.
• You immediately have a record of the transaction to reconcile with your statement.

Your electronic transaction is normally processed faster than a check. Be sure you have enough money in your account at the time you make the purchase.

Since your check is never processed by us in the traditional sense, we are unable to provide you with a duplicate copy.

Ask yourself....

• Do I understand that the information from my check will be used to make an electronic payment from my account?
• Do I have enough money in my account to cover the payment?
• Do the charges on my financial statement match my records?

Consumer Rights

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 as an LADWP customer in electronic check conversion transactions?

1. You have the right to receive notice when you provide your check advising you that information from the check will be used to make an electronic payment from your account.
2. When you provide your check, you have the right to a notice advising you of any fee that the biller 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.
3. You have the right to have this same information included as part of the regular account statement from your financial institution.
4. 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.