Intentionally writing a check with insufficient funds to cover it in one's bank account--a "bad check"--can result in a criminal conviction if it is proven to be check fraud. To make that determination, the check writer's intentions are examined to see whether he or she meant to write a bad check. Generally, "bad check" laws are prosecuted at the state level rather than at the federal level. On a national level, sales and other commercial actions are regulated by the Uniform Commercial Code, otherwise known as the UCC or simply the Code. Many states have incorporated its statutes into their laws.
Knowingly writing a bad check may be a felony depending on the check's amount. Specific terms vary by state, but in general, if the amount is less than $100.00 and it's the check writer's first offense, it is considered a misdemeanor. A writer's second offense is considered a felony. However, if the bad check is for a large amount of money, it is considered a felony on the first offense. Bad checks or "NSF checks" (nonsufficient funds) can result in tremendous financial losses for both individuals and companies.
Penalties for Writing Bad Checks
Penalties for writing bad checks are determined by state law and can be broken down into two types: criminal and civil. Civil penalties are based upon the amount that the recipient can claim after receiving an NSF check. In certain situations, this can include two or three times the amount of the check, plus any associated court costs and attorneys' fees. Criminal offenses result in prosecution and, in some instances, arrest.
Is it Always Illegal to Bounce a Check?
Sometimes, NSF checks are not considered fraud. Under Section 3-104(2)(b) of the UCC, a "check" is defined as "a draft drawn on a bank and payable on demand." Writing a post-dated check, for instance, is not "payable on demand," but it is not considered fraudulent to write one and therefore is not punishable under bad check laws. If you knowingly give a creditor or retailer a bad check, it would fall under the NSF laws.
Damages can be incurred from writing a bad check. If it falls under civil liability, the writer of a bad check can be taken to civil court and sued for the amount of the check plus court fees. If a merchant wishes to collect damages in a civil case, he or she may sue the check writer for the amount of the check plus a service charge. The amount of that charge will vary by state. For instance, in Georgia, the service charge is based on 5 percent of the amount of the check, or $20, whichever is more. If the writing of the bad check is a felony, the writer may be arrested and prosecuted.
Collecting on Bad Checks
Because bad checks are so common, check recovery agencies offer services to merchants and creditors to collect the face value of the check. Other merchants prefer to retain the services of an attorney who will decide the most appropriate course of action.