For any business, accepting checks is a service to its customers. Unfortunately, banks occasionally return checks, and dealing with them can be a frustrating process. If you are the recipient of a bad check, you can take several steps to recoup the money you lost on the sale, as well as the fees you incurred from your bank.
A return check policy may be helpful if the problem is ongoing. You may also wish to limit the different kinds of checks that you accept. For example, you might honor cashier's checks and traveler's checks but not personal checks.
Redeposit the Bounced Check
Redeposit the check. Sometimes a customer just makes a mistake, and redepositing the check with the assumption that the funds will be available on the second try can avoid embarrassment and an uncomfortable conversation for both you and the customer. This is a good step to take if a repeat customer with a good history at your business makes the mistake.
Contact the Customer
Call the customer. Good people occasionally make mistakes, and giving your customer a call, and letting him know what happened often can solve the problem. Let the customer know the amount of the check, as well as any fee you need to pay your bank. The oversight will embarrass many people, and they will make good on the check.
Send a Certified Letter
Send a certified letter with a return receipt demanding payment if you don't know the person and can't make contact by telephone. Certify the letter so you're sure the letter was received. You will also have proof that you sent the letter should you need to take legal action in the future. FreeAdvice.com indicates that the laws of most states have insufficient check laws that favor business owners, but the check writer should first be informed that the check bounced before legal action is initiated.
Make a Police Report
As a last resort, hand over the bad check to the local police agency. Knowingly writing a bad check with intent to commit fraud is a crime. Consider involving police if you can't reach the person who wrote the check after repeated tries or receive no response to your calls and letters within a reasonable amount of time. Inform the check writer of your intent to contact authorities. Don't threaten the check writer or call constantly as that may be construed to be extortion, harassment and verbal abuse. Be sure, though, that this is a step you want to take because you are not see this customer again if the matter goes to court.
Send Account to Collections
Contact a collection agency. Reputable collection agencies can spend the time necessary to get you your money back, but they will take a percentage of he money. If you have a number of bad checks or other debts to collect on, establishing a relationship with a collection agency may be your only avenue.
File in Small Claims Court
Consider taking the check writer to small claims court. If the amount you are owed is significant enough that you are willing to file a civil suit, you may be able to recoup your money. Depending on the circ*mstances, you may be entitled to reimbursem*nt for bank fees, filing fees and perhaps two or three times the amount of damages.
Further, the judge may order that the money you are owed be taken out of the check writer's salary or bank accounts to satisfy the debt. Forbes also suggests reporting the incident to consumer reporting services that tracks bad checks. Telecheck, for example, alerts merchants when a check they received has a high risk of bouncing based on the check writer’s history of fraud such as writing checks from closed banking accounts.
FAQs
What to Do When a Check Bounces
- Call the bank. After you find out that the check bounced, contact the bank. ...
- Contact the customer. You might be able to resolve the situation easily by contacting the customer. ...
- Get government help. ...
- Hire a collection agency. ...
- Go to court.
When you write a check and there's not enough funds in your account when it's presented, this is considered non-sufficient funds (NSF). When a check is returned due to NSF, it's returned to the payee that deposited the check, at their bank.
What happens if a check was returned? ›
A returned check is a check that the receiving bank does not honor. If you're the check writer, having a check boomerang means that your bank will not pay the person or business to whom you wrote it. If you are the payee, a returned check is one for which you won't get paid—at least not right away.
What if someone gives you a check that bounces? ›
What happens if I deposit a check and it bounces? If someone writes you a check that bounces after you deposit it, your bank can reverse the deposit and charge you an NSF fee or “returned item” fee. If you want to retrieve the money from the writer of the check, it's up to you to take care of it.
How many times will a bank run a returned check? ›
Generally, a bank may attempt to deposit the check two or three times when there are insufficient funds in your account. However, there are no laws that determine how many times a check may be resubmitted, and there is no guarantee that the check will be resubmitted at all.
How long can a check be returned? ›
How long are checks good for? In general, checks are good for six months. After that, banks and credit unions can cash or deposit the checks, but they aren't required to. It's best to deposit checks as soon as possible to avoid any changes to account numbers or the check expiring.
What happens if a check for bounced due to lack of sufficient funds? ›
When payment cannot be completed it is often considered as “bounced." If a bank receives a check written on an account with insufficient funds, the bank can refuse payment and charge the account holder an NSF fee. Additionally, a penalty or fee may be charged by the merchant for the returned check.
Can I get in trouble for a returned check? ›
Avoid bouncing more checks: If you write checks and you're aware that you don't have enough money to cover them, you're breaking the law. You could be charged with a misdemeanor or even a felony, depending on the amount and quantity of the unpaid transactions.
What is a cheque said to do when there is not enough money in the account to cover it? ›
If the person writing the cheque doesn't have enough money, or is committing fraud, the cheque might not be paid and will 'bounce'. This means you won't be able to keep the money. If you need to know quickly whether a cheque will bounce, you can ask for 'special presentation'.
Who is responsible for a returned check? ›
Whether you write or receive a bounced check — also called a nonsufficient funds, or NSF, check — it will cost you. Write one and you'll owe your bank an NSF fee of between $27 and $35, and the recipient of the check is permitted to charge a returned-check fee of between $20 and $40 or a percentage of the check amount.
When you write a check you don't have the funds for, it will be returned to your financial institution unpaid ––and you'll likely be charged a returned check fee, also known as a NSF fee. Unfortunately, the recipient may also be charged a fee by their bank for attempting to deposit a bad check.
Who pays for returned check? ›
Banks charge merchants for depositing checks that bounce, so they need to recoup those costs—and will pass them along to you. The fees vary by merchant and by state, and they can impact your ability to write further checks at the same business.
What happens if someone tries to cash a check and it bounces? ›
If your bank doesn't cover the check, here's what happens when your check bounces: It will head back to you, unpaid. You will typically be charged a nonsufficient funds fee or returned check fee. Was your check heading to a merchant or business?
What happens if someone writes me a bad check and I deposit it? ›
The consequences of depositing a fake check — even unknowingly — can be costly. You may be responsible for repaying the entire amount of the check. While bank policies and state laws vary, you may have to pay the bank the entire amount of the fraudulent check that you cashed or deposited into your account.
Is it illegal to write a check that will bounce? ›
Knowingly writing a bad check is an act of fraud and it's punishable by law. Criminal penalties for people who tender checks knowing that there are insufficient funds in their accounts can vary by state. Some states require an intent to commit fraud.
What should you do when a customer's check has been returned by the bank? ›
Once a check has bounced and been returned to you, you can still take it in person to the bank it's drawn on and get paid if the money is in your customer's account. Call the customer's bank to check if the funds are there; when they are, be ready to go collect the money.
Can you cash a returned check again? ›
If you now have the correct amount of money in your account, you can ask the recipient to redeposit the check. A returned check can be deposited again, but generally only once.
