Writing a check is a quick, simple and (usually) safe method to pay for products or services. Problems arise for both the consumer and merchant when the bank on which the check is drawn refuses to honor it. Common reasons for which a bank might refuse to honor a check include:

• Lack of sufficient funds in the account to cover the amount of the check
• The check is written on a closed account
• A stop payment order requested by the writer of the check
• The account on which the check is written is subject to a legal hold such as a judgment execution or a tax lien

The risks of writing a bad check can include the imposition of fees charged by the bank on which the check is written, returned check fees imposed by the merchant and filing of white-collar criminal charges. The consequences usually depend on the reason the bank refuses to honor a check.

Fees and Merchant Refusal

A check written on an account in which there is insufficient funds to cover the amount of the check will be assessed fees from the bank. Some banks charge as much as $35 for a check that is returned due to insufficient funds.

Sometimes, particularly if the bank sees that recent deposits will cover the amount of the check, it might pay the check even though the deposited funds are not available to the depositor. This courtesy comes at a cost to the person writing the check in the form of another fee.

In addition to fees charged by the bank on which the check is written, businesses usually charge customers a returned check fee. Besides the fee, some merchants will refuse to accept checks for future payments from a customer whose check has bounced.

Database Reporting

Several companies collect information on people who write bad checks and sell this data to merchants. A record of writing bad checks might result in a new merchant refusing to accept a check because of information from one of the check verification services.

Collections

A merchant to whom a customer writes a bad check might give it to a debt collection agency or to an attorney to recover the money owed. Depending upon the circumstances under which the check was written, an agreement between a merchant and a customer imposes the expenses and legal fees of collecting the debt on the person who wrote the bad check.

Criminal Prosecution

Offering a check in payment of a debt knowing the funds to cover it are not in the account is a prosecutable fraud crime. Each state has its own laws concerning the writing of bad checks, but the penalties for check fraud can include jail or prison sentences, probation, fines, restitution and a criminal record.

To learn more about the drawbacks of writing worthless checks, call 713-862-8880 and talk to Houston criminal attorney Rand Mintzer.