Texas Bad Check Laws

Anyone who wonders why some Texas businesses refuse to accept checks in payment need only review the financial impact of "hot checks," the term frequently used in the state to refer to bad checks. In the state of Texas, hot checks cost merchants hundred of thousands of dollars a year. Issuing hot checks constitutes a criminal offense under several provisions of the Texas Penal Code. The charges range from a misdemeanor to a felony and send the hot-check writer to jail.

Everyone makes mistakes from time to time, and writing a check for more than the amount in their bank account will not always send the check writer to jail. But when it is a deliberate act to defraud another person, it is a crime in Texas.

Texas codes set out two scenarios when writing a bad check is a criminal offense. The first offense is termed "issuance of a bad check." That offense is set out in Texas Penal Code Section 32.41 and defines a bad check as a check written by someone who is well aware that they don't have sufficient money in the account to cover that check, in addition to other checks or withdrawals they have made. The second hot check provision, termed "theft by check," is found in Texas Penal Code Title 31, which further defines when writing a bad check is a crime.

The crime of "issuance of a bad check" requires only that the person write the check knowing that it will not clear the bank. That is, the person is well aware, as they are paying someone by check, that the check will be returned to them by the bank for nonsufficient funds (NSF).

This may seem difficult for a prosecutor to establish, since that type of knowledge is something only the check writer can testify to with certainty – and they aren't likely to come forward with testimony against themselves. However, this is made easier by the provisions of the theft by check statute. It specifies that a hot check constitutes theft by check in two different circumstances:

1. When a person writes a bad check against a bank account that doesn't even exist.
   
2. When a person writes a bad check against a bank account that does exist, but then fails to make good the debt within a set number of days.

Either of these circumstances establishes the required knowledge element of the crime. Someone who accidentally writes a bad check will take steps to reimburse the person receiving the worthless check.

Theft, in Texas, does not depend on the value of the property or services stolen. Theft of a $5 item is still a theft. However, Texas theft-by-check penalties vary depending, in part, on the amount of the bad check. The lower the amount of the hot check, the lesser the offense charged. The range of possible charges runs from a Class C misdemeanor, the lowest criminal misdemeanor charge in Texas, to a first-class felony.

If the amount of the check is under $100, the offense is charged as a Class C misdemeanor, punishable by a fine only. The amount of the fine can be up to $500. Note that if the check under $100 is written to pay child support, it is a Class B misdemeanor.

When the check is for an amount of at least $100, but not more than $750, it is charged as a Class B misdemeanor in Texas. The charge can result in a fine of up to $2,000. The judge can also send the person to county jail for up to six months.

If the bad check is written for an amount between $750 and $2,500, it is a Class A misdemeanor, and the potential fine and jail term increase. The penalty can be up to a $4,000 fine and up to a year in county jail.

A hot check for over $2,500 is considered a felony offense in Texas and prosecuted by the district attorney. The type of felony depends on the amount of the bad check. It is a "state jail" felony when the check is less than $20,000; a third-degree felony when the check is over $20,00, but less than $100,000; a second-degree felony when the amount is between $100,000 and $200,000; and, anything over that amount, is a first-degree felony. Penalties range from a maximum of two years in state jail for a state jail felony to state prison time for other types of felonies. Fines can run up to $10,000.

Texas county district attorney offices usually have a "hot check collection department," with the express purpose of prosecuting those who commit theft by check. The procedure is slightly different depending on whether there was an existing bank account on which the check was to be drawn.

If there was a bank account, the person receiving the check must write a demand-for-payment letter. The letter must set out the specifics of the check, including the amount and date, and demand repayment of that amount and any associated fees within 10 days. Only after that period, if no payment has been made, can charges be filed for the bad check.

If the person wrote a check against a bank account that doesn't exist, no demand for payment letter is required, nor any waiting period for filing criminal charges. The check recipient has 30 days after receiving the check to file charges with the office of the district attorney or Justice of the Peace.

To prosecute a bad check, the county attorney must be able to identify the maker. That means that checks with irregular or forged signatures or checks where no identification was taken and no witnesses are available, as well as checks received in the mail without identification cannot be prosecuted.

In addition, checks for under $2,500 written more than two years earlier or "return to maker" checks deposited over 30 days from the date the check is written are unlikely to be prosecuted.