National Check Fraud Center

Frequently Asked Questions About Check Fraud

Bad checks cost local merchants hundreds of thousands of dollars. There are both civil and criminal remedies available to a person or business that has received a bad check. The following materials are intended to assist you in determining whether to proceed civilly or criminally.

Both the civil and criminal remedies are provided by State statute and must be strictly complied with in every instance. There is nothing more frustrating for the Court than having to deny a person or business a remedy to which they should be entitled because of failure to follow statutory procedures.

In criminal cases, failure to comply with any of the statutory procedures requires Judges to deny the warrant or citation. Each State has a criminal code of law regarding fraudulent checks. If you are not sure of what is required for your state and county, contact your local magistrate, court attorney, or police department. Make sure you follow the guidelines given to you. your failure could cost you not only your time involved, but the value of the check item(s).

  1. I have received a bad check, what can I do?

  2. Can I pursue criminal prosecution of a bad check?

  3. What are the elements of the offense of deposit account fraud?

  4. Where should the offense of deposit account fraud be prosecuted?

  5. What reasons for dishonor of the check will support a criminal prosecution?

  6. What is meant by present consideration?

  7. What defenses may be raised to bad check prosecution?

  8. What steps should be taken to insure a bad check can be collected?

  9. What information should I bring to court to start prosecution?

  10. Are there forms that I must fill out?

  11. What is a bad check citation?

  12. What cases are done on citation?

  13. What is a bad check arrest warrant?

  14. What cases are prosecuted by warrant?

  15. Where are deposit account fraud cases tried?

  16. What is the form of the notice that must be sent?

  17. What is the deposit account fraud (bad check) statute?

  18. What if a criminal prosecution cannot be made on a bad check I have received?

  19. When can I proceed to collect damages in a civil case?

  20. What damages can I recover?

  21. How can I recover additional damages?

  22. What should my letter say?

  23. What if I don't get the money after sending the letter?

  24. What if my case does not fit either the criminal or civil bad check damages criteria?

FREQUENTLY ASKED QUESTIONS

1. I HAVE RECEIVED A BAD CHECK, WHAT CAN I DO?

The issuance of a check on an account which is closed or has insufficient funds may constitute a crime for which the maker of the check may be prosecuted. The issuance of a check which is not honored may also give rise to a civil claim for damages. Which way you proceed in your case will depend on the circumstances in your case.

2. CAN I PURSUE CRIMINAL PROSECUTION OF A BAD CHECK?

Whether the issuance of a bad check is a crime will depend on several factors. You should review these factors carefully against the particular facts in your case before applying for a warrant or a citation. The elements of the criminal offense of Deposit Account Fraud (Bad Check) are contained in your State's Criminal Code of Laws.

3. WHAT ARE THE ELEMENTS OF THE OFFENSE OF DEPOSIT ACCOUNT FRAUD?

  1. Dishonor Check - the check must be dishonored by the drawee for one of the reasons set forth in the statute.

  2. Knowledge by the maker of the check that it would not be honored.

  3. Present Consideration - the check must have been given for present consideration.

4. WHERE SHOULD THE OFFENSE OF DEPOSIT ACCOUNT FRAUD BE PROSECUTED?

The proper venue for the prosecution of the offense of Deposit Account Fraud is the County in which the check was presented. This is true regardless of where your home office may be located or where the person who tendered the check resides.

5. WHAT REASONS FOR DISHONOR OF THE CHECK WILL SUPPORT A CRIMINAL PROSECUTION?

The check must be dishonored by the drawee for one of two reasons:

  • No account / Account closed - this is based on the status of the account at the time the check was made, drawn, uttered, or delivered, not at the time it was presented to the bank for payment.

  • Lack of funds - the check must have been deposited or presented for payment within thirty (30) days of the date of delivered, and the accused has failed to make payment of the check and a service charge within ten (10) days after receiving written notice that the check has been dishonored. A copy of the notice that will satisfy this requirement may be found in these materials.

There are many other reasons why a check may not be paid upon presentation. However, only the reasons set forth in the statute will support a criminal prosecution. If the check has been dishonored for another reason you should review the availability of civil remedies for bad checks contained in this file.

6. WHAT IS MEANT BY PRESENT CONSIDERATION?

The check must have been tendered for either wages or present consideration. The offense of Deposit Account Fraud is analogous to a theft of the item or services received through the fraudulent presentation of worthless paper when immediate payment is expected. Anything that temporally separates the exchange will negate the concept of present consideration.

Present consideration includes:

  • Goods or services tendered for check.

  • Rent which is past due or presently due.

  • Child support, pursuant to court order or written agreement.

  • State taxes, whether or not past due.

  • Simultaneous agreement for the extension of additional credit where additional credit is being denied.

  • A written waiver of mechanic's or material men's lien rights.

Present consideration does not include:

  • Post-dated check.

  • Payment on an installment account or on an open account for goods/services previously received.

  • Request by Defendant to Victim to hold check, expects to deposit soon to cover balance.

7. WHAT DEFENSES MAY BE RAISED TO BAD CHECK PROSECUTION?

  • Post-dated check - a check with a date after the date on which the check was presented is considered a post-dated check and may not be prosecuted criminally. The post-dating of the check creates an extension of credit, even if only for a day, and converts the case to a bad debt situation.

  • Stopped payment on a check - a check which was dishonored because payment was stopped, and not because of insufficient funds, may not be prosecuted criminally.

  • Payment of antecedent debt - a check which represents payment of an antecedent debt (e.g. - repayment of a loan or payment on an account) may not be prosecuted criminally.

  • Statement by the maker of the check at the time of tender that he has insufficient money in bank to cover the check, though he expects to have the money in the bank by the time the check is presented. In effect, the payee has agreed to extend credit and there is no present consideration.

  • Prior dealings of the parties.

  • Insanity:

    1. Inability to distinguish right from wrong

    2. Intoxication

      • must be involuntary

      • voluntary intoxication is no defense

  • Forgery - a check which is forged (made by someone other than the account holder and without the account holder's consent) may not be prosecuted as a bad check. It therefore vital that the payee confirm the identity of the maker of the check at the time the check is presented.

  • Lack of knowledge that check would not be honored (for example, the maker of the check did not know that someone else had withdrawn funds from the account); and

    • Good character of defendant.

8. WHAT STEPS SHOULD BE TAKEN TO INSURE A BAD CHECK CAN BE COLLECTED?

  • Be sure clerks have followed all items on this checklist.

  • Keep permanent record of home address of clerk who actually received check. This person will be an absolutely critical witness who must identify the person who made the check if the case goes to trial.

  • Deposit all checks within thirty (30) day of receipt.

  • Within ninety (90) days of receipt of check, mail certified demand letter to address given by maker of check. Give maker of check at least ten (10) days and three (3) for mailing before prosecuting criminally (This varies from state to state). You need not wait for actual receipt of notice. Try to telephone accused and keep record of your efforts.

  • Is this check actually one for present consideration?

  • Are there any defenses, including, but not limited to: post-dating, stop payment, payment antecedent debt, prior dealings, agreement to hold check, forgery, refer to maker?

  • Has management received part payment? If so, proceed civil remedy only. The acceptance of a partial payment will prevent you from seeking criminal prosecution.

  • Make photocopies of check (front and back), ten (10) day demand letter, certified mail notice, and/or envelope mailed to maker if return unclaimed.

  • Proceed criminally for all checks that meet checklist in the county where the check was passed.

  • Proceed civilly against all other checks. (Magistrate Court, if $5000.00 or less) in the county where the Defendant lives. Should the defendant live in another State, you must file in that state and county where defendants live. This could be costly to proceed.

  • Refer all persons who want to payoff bad check after criminal prosecution begun to the court or criminal prosecutor. DOT NOT ACCEPT FUNDS WITHOUT AUTHORIZATION FROM COURT.

9. WHAT INFORMATION SHOULD I BRING TO COURT TO START PROSECUTION?

You should bring with you the original check, a copy of the check (front and back), the certified mail receipt or returned letter if unclaimed, and any notes you have kept related to your efforts to collect the check.

13. WHAT IS A BAD CHECK ARREST WARRANT?

An arrest warrant is an order of the court directing any duly authorized law enforcement official to arrest the person named in the warrant for the offense charged (in this case the offense of Deposit Account Fraud). The accused will be arrested and, in most instances, allowed to post bond to secure the accused's appearance at trial.

14. WHAT CASES ARE PROSECUTED BY WARRANT?>

In most states, all misdemeanors and felony cases are prosecuted by warrant. The offense of Deposit Account Fraud is a felony where the check is for an amount in excess of five hundred dollars ($500.00) or where the check is drawn on an out of state bank, regardless of the amount of the check.

16. WHAT IS THE FORM OF THE NOTICE THAT MUST BE SENT?

    The form of the notice should be as set forth as follows:

    Date: ______________________________________

    To: ________________________________________

    Address: ___________________________________

    City: _______________________________ State: _____ Zip: ________

    You are hereby notified that the following instrument(s):

    Number Date Amount Name of Bank ______ ______ ________ __________________________ ______ ______ ________ __________________________ ______ ______ ________ __________________________ ______ ______ ________ __________________________ ______ ______ ________ __________________________ drawn upon __________ and payable to __________, (has) (have) been dishonored.

    Pursuant to South Carolina code of law, you have ten days from receipt of this notice to tender payment of the total amount of the instrument(s) plus the applicable service charge(s) of $ 25.00, the total amount due being ________ dollars and ____ cents.

    Unless the total amount is paid in full within the specified time above, a presumption in
    law arises that you delivered the instrument(s) with the intent to defraud and the dishonored instrument(s) and all other available information relating to this incident may be submitted to the magistrate for the issuance of a criminal warrant or citation or to the district attorney or solicitor for criminal prosecution.

    __________________________________________________

    Name of Sender: __________________________________

    Address: _________________________________________

    City: ____________________________ State: _____ Zip: ______

    Telephone: _______________________________________

18. WHAT IF A CRIMINAL PROSECUTION CANNOT BE MADE ON A BAD CHECK I HAVE RECEIVED?

You may still be able to collect the check, which is a contractual promise by the maker of the instrument that it may be presented for cash at the maker's bank for cash on demand.

19. WHEN CAN I PROCEED TO COLLECT DAMAGES IN A CIVIL CASE?

If you have received any check for which payment was refused for either lack of funds or no account, you may sue the maker of the check for the amount of the check and, in some instances, additional damages. Civil damages for writing bad checks are provided for and fully set forth in your state statue.

21. HOW CAN I RECOVER ADDITIONAL DAMAGES?

First, you must attempt to negotiate the check. After you have received notice that the check will not be paid, you must then make a written demand upon the maker of the check for payment in cash of the amount of the check plus a service charge. The service charge varies from state to state, for an example, for the state of Georgia it is based on either 5% of the face value of the check or $20.00, whichever is greater. In South Carolina, the service charge is $25.00. The notice must be mailed to the maker of the check by certified mail.

If the maker of the check does not tender to you the amount of the check plus the service charge within ten days of receipt of the letter, you may make a claim for the additional statutory damages set forth above.

22. WHAT SHOULD MY LETTER SAY?

The statute sets forth a form letter that you may use. If you use another letter, it must substantially comply with the statutory form as set forth below:

    State of Georgia-Example

    Date: ______________________________________

    To: ________________________________________

    Address: ___________________________________

    City: _______________________________ State: _____ Zip: ________

    You are hereby notified that a check or instrument numbered ________, issued by you on ____________ (date), drawn upon ____________ (name of bank), and payable to ____________, has been dishonored. Pursuant to Georgia law, you have ten days from receipt of this notice to tender payment of the full amount of the check or instrument plus a service charge of $20.00 or 5 percent of the face amount of the check or instrument, whichever is greater, the total amount due being $ ________. Unless this amount is paid in full within the ten-day period, the holder of the check or instrument may file a civil suit against you for two times the amount of the check or instrument, but in no case more than $500.00, in addition to the payment of the check or instrument plus any court costs incurred by the payee in taking the action.

    _________________________________________________

    Name of Sender: __________________________________

    Address: _________________________________________

    City: ______________________________ State: _____ Zip: _________

    Telephone: _______________________________________

23. WHAT IF I DON'T GET THE MONEY AFTER SENDING THE LETTER?

The maker of the check has ten days from receipt of the letter to tender payment, in cash, of the amount of the check plus service charges. Failure of the maker of the check to pay the above sum will entitle you to proceed with an action for statutory damages.

18. WHO DO I SUE?

You should sue the maker of the check. This is generally the same person who gave you the check. However, in the case of a third-party check, it will be the person who actually wrote the check.

19. WHERE DO I SUE?

You must file your lawsuit in the county in which the Defendant resides, regardless of where the check was given to you.

20. WHAT DAMAGES CAN I RECOVER?

You may be able to collect the amount of the check, plus damages of up to three times the amount of the check, but in no case more than $500.00, plus court costs. This varies from state to state.

WHAT DEFENSES MAY BE RAISED TO A CLAIM FOR STATUTORY DAMAGES?

The maker of the check may raise several possible defenses to an action for statutory damages. These include: (1) full satisfaction of the check plus service charge was made prior to the commencement of the action; (2) the bank erred in dishonoring the check; and (3) the acceptor of the check knew at the time of acceptance that there were insufficient funds on deposit for the check to be honored.

21. WILL STATUTORY DAMAGES ALWAYS BE AWARDED?

No, there are several factors that may be considered by the court in ruling on a claim for statutory damages. The court may waive all or part of the statutory double damages if it finds that the defendant's failure to satisfy the dishonored check was caused either by the defendant having received a dishonored check or economic hardship.

The defendant may also avoid statutory double damages after suit has been filed by paying to the plaintiff the amount of the check, service charges on the check, plus all court costs.

24. WHAT IF MY CASE DOES NOT FIT EITHER THE CRIMINAL OR CIVIL BAD CHECK DAMAGES CRITERIA?

You may still seek to collect the amount of the check, or the debt represented by the check, by suing the maker of the check for the amount of money owed to you. The fact that the elements of the criminal or civil statutes does not apply to your case does not negate the fact that the person who made the check owes you money.


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