California Non Sufficient Check Laws
Writing a check without sufficient funds, or a bad check, equates to receiving a good or service without paying for it. Merchants and service providers who receive a bad check can seek penalties in addition to the price of the goods or services they deliver. For the bad check passer in California, inadvertence or mistakes in maintaining your checking account may expose you to only civil liability. Those who write checks knowing they cannot cover them face criminal prosecution and possibly jail or prison time.
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Definition of a Check Drawn on Insufficient Funds
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California law defines a check drawn on insufficient funds as a check that a bank dishonors because the drawer -- the person writing the check -- does not have enough funds or credit in his bank account to pay the check, does not have an account, writes it on an account that the writer does not have or stops payment on the check.
Service Charges
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The recipient of a bad check may charge and recover from the check presenter, or passer, a service charge up to $25 for the first bad check and up to $35 for subsequent bad checks from the presenter.
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Civil Penalty for Writing a Bad Check
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California law permits the recipient to recover a civil penalty of three times the unpaid amount of the check, with a minimum penalty of $100 and a maximum of $1,500. To recover the penalty, the recipient must demand in writing that the check passer pay the amount of the check and service charge within 30 days. The Marin County district attorney's office suggests that the demand identify by name and address the check writer and recipient and the check amount; state that the writer may face a civil penalty unless the writer pays the check, service charge and mailing costs within 30 days; and explain where to send payment.
Defense of Good-Faith Dispute With Recepient
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A check passer who stops payment does not have to pay the penalty if the passer reasonably believes that withholding payment is permitted. A passer may withhold payment for non-delivery of the goods or services, or an overcharge by the recipient of the check. The recipient must prove a good-faith dispute by clear and convincing evidence. The recipient must notify the check passer that if no good-faith dispute exists, the passer may have to pay the service charges and check amount within 30 days or face penalties.
Suing the Check Passer
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File a lawsuit to collect the unpaid check amount and penalty. The recipient may sue the check passer for the penalty and the amount of the check if the passer does not pay the check amount, service charge and mailing costs within 30 days. File the suit in small claims court if the sum of the penalty and check amount is less than $5,000.
Criminal Penalties
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Passing a bad check can result in jail time. California law makes it a crime to make or present a check knowing that the maker or presenter does not have enough funds to cover the check in full. Those who pass bad checks exceeding $450 or have been previously convicted of passing bad checks face one year in a county jail or state prison. Otherwise, the bad check passer faces a maximum of one year in a county jail.
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