It happens. Someone get paid with a check from a customer and the payment ends up bouncing due to insufficient funds (“NSF”). Most of the time, these companies end up letting it go because it just isn’t worth it financially to pursue the customer for the missed payment. Small business owners especially feel the brunt of receiving NSF checks because these non-payments eat up a bigger portion of the bottom line. However, before you give up on that dishonored check completely, you should be aware that it might be worth your small investment of time and money under Michigan law to pursue legal remedies and get what you deserve.
CIVIL PENALTIES FOR PASSING A DISHONORED CHECK
“In addition to applicable penal sanctions, a person who makes, draws, utters, or delivers a check, draft, or order for payment of money upon a bank or other depository, person, firm, or corporation that refuses to honor the check, draft, or order for lack of funds or credit to pay or because the maker has no account with the drawee is liable for the amount of the dishonored check, draft, or order, plus a processing fee, civil damages, and costs, as provided in [MCL 600.2952].” MCL 600.2952(1).
There is a two-step process for recovering under this statute. The first step is to make a written demand for payment of the check, draft or order and send it to the maker by first-class mail. MCL 600.2952(2). The text of the letter must be as follows:
“A check, draft, or order for payment of money drawn by you for $__________ was returned to me/us/our client (client’s name) dishonored for:
[ ] Insufficient
[ ] No account
This notice is a formal demand for payment of the full amount of the dishonored check, draft, or order plus a processing fee of $25.00 for a total amount of $__________. If you pay this total amount within 7 days, excluding weekends and holidays, after the date this notice was mailed, no further civil action will be taken against you.
If you do not pay the $__________ as requested above, but within 30 days after the date this notice was mailed you pay the amount of the dishonored check, draft, or order plus a $35.00 processing fee, for a total amount of $__________, no further civil action will be taken against you.
If you fail to pay either amount indicated above, I/we/our client will be authorized by state law to bring a civil action against you to determine your legal responsibility for payment of the check, draft, or order and civil damages and costs allowed by law.
If you dispute the dishonoring of this check, draft, or order, you should also contact your bank or financial institution immediately.”.
If the maker of the check, draft or order responds and makes payment within 7 days of the date of the letter, then he or she is liable for the full amount of the dishonored check plus $25.00. MCL 600.2952(3)(a). If the maker of the check, draft or order responds and makes payment within 8 to 30 days of the date of the letter, then he or she is liable for the full amount of the dishonored check plus $35.00. MCL 600.2952(3)(b).
If the maker of the check, draft or order refuses to make payment within 30 days of the demand letter, then the wronged recipient of the dishonored check will have to file suit against the maker to recover for money damages. However, at this stage, the possible recovery increases dramatically and the maker of the bad check, draft or order is liable for ALL of the following:
- The full amount of the check, draft, or order. MCL 600.2952(4)(a).
- Civil damages of 2 times the amount of the dishonored check, draft, or order or $100.00, whichever is greater. MCL 600.2952(4)(b).
- Costs of $250.00. MCL 600.2952(4)(c).
This action can even be brought in small claims division of the district court, but the amount of damages awarded cannot exceed the statutory jurisdiction of the small claims court ($6,500.00 in 2022). MCL 600.2952(6). With the availability of triple damages plus $250.00, it may well be worth your while to pursue this unpaid debt.
CRIMINAL PENALTIES FOR PASSING A DISHONORED CHECK
In addition to the possible civil liability, a person who passes a NSF check can also be charged with a crime:
“A person shall not, with intent to defraud, make, draw, utter, or deliver any check, draft, or order for the payment of money, to apply on an account or otherwise, upon any bank or other depository, if at the time of making, drawing, uttering, or delivering the check, draft, or order he or she does not have an account in or credit with the bank or other depository for the payment of the check, draft, or order upon presentation. A person who violates this subsection is guilty of a felony, punishable by imprisonment for not more than 2 years, or by a fine of not more than $500.00, or both.” MCL 750.131a(1).
The difference between proving a civil case and proving a criminal case for dishonored checks is that the prosecutor has to prove that the maker of the NSF instrument intended to defraud the person receiving it. A person cannot be convicted if they negligently or accidentally bounce a check when they thought or had reason to believe they had sufficient funds in their bank account to cover the balance. For the prosecutor to decide if there is intent, they would want circumstantial evidence such as the offender giving bad checks to multiple people or that the amount of the check was unrealistic compared to his or her true financial situation. An individual burned by a bad check cannot pursue a private criminal prosecution on his or her own, but he or she can make a police report and hopes that the prosecutor picks up the referral to press charges.
THE BOTTOM LINE
If you were the victim of a bounced check, you may have a case for recovery in court that can lead to treble damages and an additional $250.00 for costs. It can be worth your time to speak to a lawyer and figure out what your return on investment will be. Likewise, if you are charged with the crime of passing a dishonored check with the intent to defraud, then you need skilled legal representation in your corner to protect your rights. The stakes are too high to not take this seriously since a felony conviction can result in fines, probation and even prison time.
If you or a loved one have further questions or need legal representation, then do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC for assistance today.