Alabama enacted a comprehensive bad check law in 1991, entitled the "Worthless Check Act.” This law was intended to deter people from writing bad checks and to punish them for doing so. The law gives the payee, or the person to whom the check was written, certain responsibilities and gives the check writer the chance to make good on their debt.
A later amendment caused the act to apply to electronic payments as well. Anyone living in Alabama should get an overview of these laws and an understanding of the procedure to follow if they should write, or be given, a bad check.
Alabama Bad Check Law
Alabama's bad check law is found in Section 13A of the state statutes. The Worthless Check Law describes the crime of "negotiating a worthless negotiable instrument," the criminal penalties attached, and the responsibilities of all parties to try and resolve the situation.
The crime as described in the statute states that, in Alabama, a person commits the crime of negotiating a worthless negotiable instrument if they negotiate or deliver a negotiable instrument for a thing of value and with the intent, knowledge or expectation that it will not be honored. Under Alabama state law, negotiating a worthless negotiable instrument is prosecuted as a Class A misdemeanor.
Proving Prior Knowledge of NSF Check
In order to prosecute this crime, there must be evidence showing that the check writer wrote a bad check knowing or expecting that there were insufficient funds in their account to cover the check or that it would otherwise be dishonored. Alabama law sets up several presumptions that aid in this proof, including two methods of establishing prima facie evidence of this prior awareness that the instrument would be dishonored. (Prima facie means that this evidence is sufficient in and of itself to make this proof.)
First, the statute provides that it is conclusive evidence if the check is from a bank or financial institution from which the check writer does not have an account. This evidence is sufficient to establish prior awareness that the check would be dishonored.
Second, if the check is presented to the financial institution within 30 days after it is received in payment and it is returned for insufficient funds, it can be considered prima facie evidence of prior awareness that the check would be dishonored. For this to apply, the person to whom the check is written must give the check writer notice by certified or registered mail that the check was returned and demand payment. If the check writer fails to make good on the bounced check, plus a reasonable service charge, within 10 days, this establishes proof that they knew the check would be dishonored.
Proving Identity of Worthless Check Writer
Obviously, in order to prosecute someone for this offense, there must be evidence that the individual was the person who wrote the check or negotiated the payment. This can be difficult to prove, but the Alabama statute describes evidence that will be considered sufficient to make this proof. That is, the person accepting the check must obtain the check writer's name, residence address and home phone number, either from the check itself or from a check-cashing identification card issued by the merchant after obtaining this information.
In addition, the person accepting the check must actually see the check writer sign the check and must initial that signature. It is also helpful if the person accepting the check requires the check writer to show a government-issued photo identification before accepting the check. This includes a driver's license, a passport or any other photo ID issued by a government entity.
Responsibility of the Merchant
The merchant or individual who receives a bad check has several responsibilities to fulfill before they can press charges. Under the statute, that person must do three things:
- Submit the check to the financial institution within 30 days of receipt.
- Notify the check writer by certified or registered mail that the check was returned for insufficient funds.
- Make a written demand for the amount of the check within 10 days, called a Ten-Day Notice to Clear.
The merchant can also demand a service fee of up to $30. The language to use in the Ten-Day Notice is set out in the statute and should be followed.
If the person receiving the check fails to submit it to the bank within a month, or fails to attempt to notify the check writer that the check was returned, they are still owed a debt. However, they cannot take the matter to the Worthless Check Unit of the local district attorney's office for prosecution. Note that if the notice is sent to the address of the check writer that is on the check, it constitutes notice whether or not the check writer accepts the letter.
Worthless Check Unit
Alabama district attorney’s offices usually have a section of attorneys who work to recover the amount of bad checks for the victims. Once the merchant or individual receiving the bad check has followed the statutory notice requirements, they can take the matter to the Worthless Check Unit of their local district attorney office for assistance. If they cannot pressure the check writer into paying the debt, plus all administrative fees, they can seek criminal charges against them.
Not every bad check will be handled by the district attorney's Worthless Check Unit. Any check not deposited within 30 days will not be handled by this unit. Nor will any post-dated checks, checks marked "stop-payment," checks written on an account that has been frozen by the bank, or checks with forged or irregular signatures.
The unit will not help to recover bad checks written to cover lease or loan payments or cash advance checks. A person accepting a bad check in any of these circumstances can consider an Alabama small claims court action.
Bad Check Statute of Limitations
An individual who is given a bad check in payment for something of value generally has two years in which to seek an action against the check writer. There are certain types of checks with a three-year statute of limitations.
A merchant or individual can bring an action against a bad check writer within three years if the check is a certified check or a cashier's check verified by the bank. These types of checks cannot bounce since the funds are set aside by the bank at the time the check is made negotiable. If these checks are returned, it means they are fraudulent. Finally, there is a three-year statute of limitations on bounced traveler's checks.
Teo Spengler earned a JD from U.C. Berkeley Law School. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an MA and an MFA in English/writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.