Many
states have laws which impose serious penalties on the act of writing
insufficient funds checks. Some of these
laws are criminal where you can call the police upon receiving an NSF check. The criminal law consequences are typically
applicable when a check fails to clear based on a C.O.D. delivery. Refer to this as a contemporaneous exchange
of value and intent to defraud. Intent
is presumed from the fact the customer didn’t put enough money in the account
to clear the payment. Contemporaneous is
the lack of credit terms where the customer was supposed to pay you at the same
time he delivered the goods or services.
Payment on the account or post dated checks failing to clear would not
be considered Acontemporaneous@ and therefore
will not be prosecuted.
Consider
this: a customer is to purchase a box of nails from your company. He is new or just has not been approved for
credit yet, so he must pay by cash or check.
That is called C.O.D. which stands for collection on delivery. The law frowns on people who bounce checks
for such purchases and this is an example of where the police or the prosecutor
might prosecute on the bad check you have received.
Many
states also impose civil penalties which are different from criminal
penalties. Civil penalties occur where
you can sue the customer for additional sums of money such as 2 or 3 times the
amount of the insufficient funds check. Michigan,
for example allows the recipient of a bad check to sue for the amount of the
check plus twice the amount, plus $250 costs…basically three times the check
amount plus costs!
Theft
by check may be a misdemeanor or even a felony (a bad crime punishable by more
than one year in prison) but that does not guaranty you will ever see your
money. If the offender is put in jail
for the crime, he may even become less collectible for the insufficient funds
check. How ironic.
For
the police to even look at a case where there was an NSF check, there must have
been no agreement to hold the check for a period of time. Also, if the NSF check was given as a payment
on open account or other credit
transactions, it is not a crime. You can
sue in civil court however.
Contact
your own bank and arrange for overdraft protection as a defense mechanism for
receiving bad checks. Overdrawing an account
is easy. When you arrange in advance for
an overdraft protection, an accidental overdraft will be covered and you won=t have the
embarrassment of having written an NSF check yourself. You will then receive a bill or a debit on a
line of credit you have established with the bank. Planning like this, avoids
embarrassment.
