PASSING BAD CHECKS
A compilation of resources on check kiting, NSF issues
& fraud
Has your credit history with Chexsystems
been ruined because of bounced checks? Whether you are the
perpetrator or a victim, the resources on this page can help
point you in the right direction.
Passing bad checks is a way that people
get what they need now and hope to pay later. Trouble is,
their timing is off or they have no intention to pay later
and the check bounces. The merchant is left with a bad check.
Whether you pass bad checks because you're dishonest or it's
a simple accident, stiff penalties can apply. Criminal charges
can be brought against you if the DA can prove all criminal
elements especially fraud and intent. Merchants lose hundreds
of thousands every year in bad checks and the consumer who
pays by legitimate means ends up picking up the tab. You cannot
however, escape risk free.
There are a number
of unpleasant consequences for writing bad checks:
-You could be charged fees
-Your bank or credit union could charge
you an overdraft fee, which is typically around $25.00 per
check
-The place you wrote the check could also
charge you a fee
-The place you wrote the check could refuse
to take any more checks from you
-You could receive calls and letters asking
you to repay the money
-Your name and account information could
be reported to an agency, like SCAN, Telecheck, Equifax Check
Solutions, or others where it would be placed on a bad check
list
-Then, other places could refuse to take
your checks
-Your bank could close your checking account
-You would not be able to write checks
-Your bank could report your closed account
to ChexSystems. As
a result other banks could refuse to open a checking account
for you for some time.
-You can ruin your debit history
Civil & Criminal Penalties
Bad checks, also known as NSF checks, bounced checks, rubber
checks, etc., can be a big problem for any credit department.
There are both civil and criminal penalties for this unlawful
act, although it is much more costly and difficult to prove
a criminal case.
-Civil
Penalties by State
-Criminal Penalties by State
-ID
Theft State Laws
-
Forgeries,
Forged Endorsement, Alterations,and other Check Problems-
Who can Sue?
-UCC
codes by State to look up SOL and other "negotiable instrument"
laws by state
-Is a check considered a written contract,
what is the SOL for checks?
A check is not considered a "contract" although
some may argue that it is (because it's a signed promise to
"pay"). A contract requires consideration by both
parties (an offer and acceptance) and consists of nothing
more than an (enforceable) promise to pay by one party
but no contract was drawn up by the other party. What
it is, is a negotiable instrument and therefore subject to
governing UCC (uniform commercial code) if there is
one for the state in question. UCC
is where you usually find the time limitations on checks.
Many states have their own specific
(SOL) statute of limitations dealing with checks. Those would
trump any general statute of limitations and even the UCC
limitations. The UCC is not a federal statute but rather a
system set up to structure commercial transactions. Since
it isn't a federal rule there would be no supremacy clause
(as in who rules state or federal) but rather the state could
choose to adopt it or not. Most states have adopted it. According
to FindLaw, a more specific statute rules over (trumps)
a more general statute. Therefore if a certain state has a
more specific statute it will often trump (rule over) the
UCC entirely. Bottom line: read the UCC but read the state
rule as well and see which one applies--, is more specific
or offers more protection. You will usually find the SOL for
collecting the check in the state code.
The following two links provide information
about checks returned by banks and other financial institutions.
-SCAN
-Telecheck
Check fraud describes a
number of activities including:
Check Kiting - this involves
opening multiple checking accounts so that checks from one
account are written to cover checks from another account.
Recent legislation has required banks to make funds available
sooner and this has resulted in even more occurrences of check
kiting.
Counterfeiting - the ease of desktop
processing and the high quality of readily available printing
and copying have made counterfeiting a significant factor
in check fraud. These methods are used to create or duplicate
checks. In addition, counterfeiting can involve chemical alteration
to remove some or all of the information on a check so that
it can be replaced with other information.
Forgery - two common types of forgery
exist. Stolen checks can be endorsed and presented for payment
at stores or banks. This often also involves the use of false
identification documents. The other common type of forgery
involves employees issuing checks without authorization.
Paperhanging - this term
describes purposefully writing checks on closed accounts or
reordering checks for closed accounts.
Frequently, check fraud starts with the
theft of a check. A blank check might be stolen from your
home or car. An old or canceled check could be stolen from
your garbage. A check you have written to pay a bill could
be stolen from the mailbox.
What can I do to prevent check fraud?
Since most check fraud starts with the
theft of a check, you should keep your checks as safe as possible.
Always reconcile your bank statements as
soon as you receive them.
If you use automated teller machines, do
not write your PIN number on your card or anywhere in your
wallet or checkbook for a thief to find.
Don't use checks or deposit slips as scratch
paper.
Shred old checks and bank statements before
you throw them away.
Fill in the payee line and amount line completely
on any checks you write. Don't leave blank space that someone
can alter.
Don't provide your bank information over
the telephone.
Don't place outgoing mail in an unlocked
box.
Install a lock on your mailbox. You can
cut a slit in the mailbox large enough to slide mail through
but not large enough to fit a hand through.
What if I am a victim of check fraud?
If you are a victim of check fraud, it is
in your best interest to call these institutions:
Your local bank or credit union. Report
the fraudulent activity and ask them to advise you on what
steps to take next. For example, should you close the account,
put a stop payment on all checks other than ones you know
you wrote, whom else should you notify, and so forth.
Your local law enforcement office. Give
them the necessary information and answer all their questions
in detail.
The check service companies - these firms
gather information on bad checks and then report that information
to their customers. Report to these companies that you are
the victim of fraud and that you did not write the checks
that were stolen. Ask what other information you might need
to provide. Telephone numbers for the largest check service
companies are:
Check Rite 800-766-2748
ChexSystems 800-513-7125
Equifax-Telecredit 800-437-5120
NPC 800-262-7771
Telecheck 800-685-5000
Equifax Risk Management Services 800-898-3068
Equifax 800-556-9000
CRA Security Systems 800-486-0955
The credit bureaus. Again, tell these agencies
that you are a fraud victim and your checks were stolen. Ask
what other information you might need to provide.
Equifax
PO Box 105069
Atlanta, GA 30348
800-505-2136
Trans Union
PO Box 6790
Fullerton, CA 92634
800-680-7289
Experian
PO Box 1017
Allen, TX 92634
800-301-7195
Contact AboutChecking.com
for more details on check education.
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