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What to do if you’ve been burned by a bad check.
What if you didn’t get paid for work you’d provided? Or worse, what if you thought you’d been paid, when in fact you hadn’t? Perhaps you have already gone through this emotional and financial roller coaster. If you haven’t, you’ll want to know how to avoid it.
Every year, California merchants lose millions of dollars to bad-check writers. A bad check basically means the check writer has insufficient funds or credit in the account on which the check is written; or the person that made the check doesn’t have an account with the bank on which the check is drawn; or the writer of the check stopped payment on the check. Regardless of the means, you were given a faulty IOU. Now what do you do?
Though there are both civil and criminal penalties for people who pass bad checks, it’s generally harder to go after someone using criminal law. Besides, it’s usually most important to you to collect your money (sending the bad-check writer to jail is likely a secondary thought). If you want to bring criminal charges against someone for writing a bad check, contact the police department, sheriff's office or the district attorney in the county where the alleged conduct took place.
Under Section 1719 of the California Civil Code, the receiver of a bad check may be able to recover the original amount of the check, plus triple damages (three times the amount of the check), with a minimum amount of damages of no less than $100 and no more than $1,500, provided the maker (writer) of the check is given sufficient notice. California law also allows the recipient of a bad check to recover a service charge of an amount not to exceed $25 for the first check passed on insufficient funds and an amount not to exceed $35 for each subsequent check passed by the same maker on insufficient funds.
You can go after the maker under Section 1719 in small claims court if the amount does not exceed $5,000, or in any other court of jurisdiction depending on the amount of the transaction. Generally speaking, attorney’s fees can’t be collected for pursuing a bad-check writer.
If you intend to accept or continue accepting checks in your business, establishing a check acceptance policy could help minimize the financial losses from bad checks. Here are some general ideas and guidelines:
• Ask for a driver’s license, and record the license number on the front of the check.
• Ask the person giving you the check for home and work telephone numbers.
• Refrain from accepting postdated checks.
• Have the person sign the check in your presence; don’t accept checks that have already been signed.
• Don’t accept out-of-state checks.
• If you’re suspicious, ask the person to pay with an ATM card, credit card or the king of all payments: cash.
• Avoid the risk of accepting a check for an amount that could cause financial hardship for your business—ask for payment in cash or a cashier’s check instead.
Part of my law practice involves debt collection for clients, and bad checks usually cause frustration and worry. These problems can be handled by appropriate and wise counsel, in addition to the guidelines above.
Eric Gersten
Attorney at Law
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