Iowa Bad Check Laws

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Writing bad checks can be a costly proposition in Iowa. Various civil and criminal penalties will apply, hinging mainly on the amount incurred for a non-sufficient funds check. Bad check writers get 10 days to make the amount good after receiving notice from the individual's or business's bank. If no response is forthcoming, the check writer can be referred for criminal prosecution, civil collection remedies or a small claims court lawsuit.

Criminal Penalties

As in most states, Iowa mandates progressively stiffer criminal penalties, depending on the amount and frequency of the offenses. First offenses and amounts under $50 can mean a $300 fine and six months in jail. Second offenses bring a one-year sentence a $1,000 fine. Third offenses, and amounts of $50 or more, are punishable by $5,000 fines and three years in prison.

Civil Penalties

Bad check writers also face civil penalties. When a check comes back for insufficient funds, Iowa law allows 10 days to make it good. This request is usually made by sending the writer a notice. If nothing is done, the business can begin collection procedures or sue in small claims court. Awards are limited to $100 or triple the amount, with $500 established as the maximum penalty.

Diversion Programs

Although the consequences appear severe, other factors -- such as progress in making restitution -- will influence how local prosecutors handle bad check cases. In many areas, first-time offenders can enroll in diversion programs like those offered by Dubuque County Attorney Ralph R. Potter. Participants can avoid a criminal record by completing an eight-hour class and paying restitution.

Social Consequences

Diversionary programs soon encountered criticism over the collection methods employed by American Corrective Counseling Services, Inc., which managed them for Dubuque and many other counties. Company notices that threatened arrests or lawsuits ran afoul of federal law -- which bars such tactics unless authorities plan to act, the "Des Moines Register" reported in 2001. Class action lawsuits soon followed in Iowa and California, Florida, Georgia, Illinois and Indiana.


The Iowa suit stemmed from a September 2000 filing in U.S. District Court by Lori Liles, who received a notice on a county attorney's letterhead. Liles contended that the notice was deceptive, since it implied that she would be prosecuted unless she repaid the check and paid additional fees to join the program. In December 2003, American Corrective Counseling Services proposed a settlement for 800,000 members of the lawsuit, to be paid from its $2 million insurance policy.

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