Receiving a Bad
Check: Your Rights and Responsibilities
In the current
business climate, business owners are receiving bad checks more frequently, and
many customers are unable to make good on the bad check
Most business owners have received a bad check from
a customer, due to "Non-Sufficient Funds" (also known as NSF), "Stop Payment" or
"Account Closed."
A.R.S. § 13-1807 defines the crime of issuing of a bad check as follows:
"A person commits issuing a bad
check if the person issues or passes a check knowing that the person does not
have sufficient funds in or on deposit with the bank ... for the payment in full
of the check as well as all other checks outstanding at the time of issuance.
As the holder of a bad check, what are your
options? Ideally, after you receive a bad check, you can call the customer and
reach an amicable resolution. Unfortunately, in the current business climate,
business owners are receiving bad checks more frequently, and many customers are
unable to make good on the bad check.
Criminal Enforcement.
Issuing a bad check is a Class I misdemeanor for
which the penalty is up to six months in jail. If the bad check is for $5,000 or
more and the check writer refuses to pay the full amount of the check plus
interest, the check writer can be charged with a Class 6 felony, which is
punishable by up to two years in prison.
The County Attorney will prosecute bad check
violations. However, before you seek the assistance of the County Attorney you
must give notice to the check writer that you have received a bad check. You may
give actual notice (i.e., informing the check writer directly), or you may give
written notice sent by registered or certified mail, return receipt requested,
or by regular mail that is supported by an affidavit of service by mailing.
The notice must give the bad check writer 12 days
to pay the full amount of the check, in addition to any reasonable costs and
fees incurred by you. If, after 12 days, you have not received payment, you may
turn the matter over to the County Attorney for criminal prosecution.
Civil Enforcement.
Arizonas civil bad check statute (A.R.S.
§ 12-671) states:
"A person who, for himself or for
another, with intent to defraud, makes, draws, utters, or delivers to another
person or persons a check ... for payment of money, knowing at the time of such
making, drawing, uttering or delivery, that he or his principal does not have an
account or does not have sufficient funds
to meet the check or draft in full
upon presentation, shall be liable to the holder of such check ... for twice the
amount of such check ... or fifty dollars, whichever is greater, together with
costs and reasonable attorney's fees[.]"
In other words, you, the check holder, can recover
$50 or twice the amount of the bad check, whichever is greater. Again, before
beginning a civil lawsuit to collect on the bad check, you must first provide
actual notice or written notice sent as described above. After receiving notice,
the bad check writer has 12 days to pay the full amount of the check. If the bad
check writer fails to pay, it will be presumed that the person intended to
defraud the check holder when writing the bad check. The notice should be sent
to both the customer on whose account the check is drawn and the signer of the
bad check.
Avoiding Bad Checks.
So, how do you avoid accepting bad checks? Be
cautious of new checking accounts, as the majority of bad checks are drawn on
accounts less than a year old. Make sure the date is accurate and the written
amount matches the printed amount of the check. Also look for watermarks or the
presence of other fraud prevention markings.
This
article was published in the February 2010 issue of the Scottsdale Airpark News |
