Checks (Insufficient Funds)
From Consumer Wiki
Civil Code Sections 1719 et seq.
Claim for Service Charge:
The payee of a check that has been returned for insufficient funds can require the drawer to pay the payee the face amount of the check and a service charge of up to $25 for the first check and up to $35 for each subsequent check to that payee that is returned for insufficient funds.
[CC § 1719(a)(1)]
The drawer of the check is not liable for a service charge in any of the following situations:
The drawer is not liable if the drawer presents the payee with written confirmation from the drawer's bank that the check was returned to the payee due to the bank's error. [CC § 1719(a)(4)]
Delay in automatic deposit:
The drawer is not liable if the drawer provides the payee with written evidence that the drawer's account had insufficient funds due to a delay in the regularly scheduled transfer or posting of a direct deposit of a social security or government benefit assistance payment. [CC § 1719(a)(5)]
Service charge already imposed:
The drawer is not liable if a service charge has already been charged with respect to that check.
Claim for Statutory Penalty:
Under California's Bad Check Law [CC § 1719, as amended by Stats. 1996, Ch. 1000 (AB2643)], a person who has written a check to another person or business can be required to pay the amount of the check and either a statutory service charge or a statutory penalty if the check is returned by the bank due to insufficient funds.
The Bad Check Law states that the drawer must pay to the payee the following amounts:
a. the face amount of the check, plus a statutory service charge; or, if the drawer does not pay this total in full, then --
b. upon the payee's proper written demand for payment, the face amount of the check, plus a statutory service charge, plus the costs to mail the demand for payment; or, if the drawer does not pay this total in full within 30 days, then --
c. if the payee has made a proper written demand for payment, and the drawer has not paid to the payee, within 30 days of the demand, the total at (b), then --
i. the face amount of the check, plus
ii. a statutory penalty of three times the face amount of the check, but not less than $100 nor more than $1,500. [CC § 1719(a)(1), (2).]
Several limits apply:
(a) The payee of the check cannot recover both a service charge and a statutory penalty.
(b) The payee cannot recover either of these unless certain conditions described in this Legal Guide have been met.
(c) Only one statutory penalty can be recovered with respect to the same check.
(d) Interest cannot be claimed if either a service charge or a penalty is claimed.
(e) Multiple recoveries for the same loss are not allowed.
Sacramento County District Attorney
901 G Street
Sacramento, CA 95814
Department Publications: None
Other References: District Attorney by County Bank Complaints/Information
Other Referrals: Small Claims Court