Is It Legal

Can you give more information, lb? I assume this is related to your other post. It is legal in my state, but I have never had a check returned that I did not know the reason.

breeze

 

If you are talking about credit card payments that are returned by your bank, then I believe yes. This is only because in your consumer disclosures it will say somewhere that you will be charged for returned payments.

For example:

In my 1st Premier disclosures it states:
Returned Item Charge: If any check or other payment instrument is not honored, for any reason by the institution on which it was drawn, there will be a Returned Check Charge imposed on your credit account in the amount of $25.00.

I believe that they MUST inform you of those fees before you open your account, and most banks do.


Now, if you are talking about a business, I remember seeing a sign on almost all registers saying that returned checks will have a fee added to them when and if you go and pay on that returned check. Again, they have informed you of that fee prior to your writing the payment instrument. If you didn't take the time to read the sign, then it is your loss. That is how the business looks at it.

Hope this helps,

 

I believe that when the bank deposits your check and it is returned, the bank charges a fee to the business. The fee that you pay to the business covers that fee that the bank charges.

You wrote a bad check to a business. you received goods and or services for that bad check. You should have to pay for the fee because you really didn't pay for anything when you wrote that check.

You receive nothing in exchange for the fee.

 

Actually there is a law. Many places are cracking down on people who write bad checks. In Texas (as with many other places) the act of failing to make restitution on a check written for goods and services which is not honored by your bank is called theft by check. Usually what will happen is the merchant will get the check back from their bank (after being charged a fee). The merchant contacts you to make good on the check (if it's a small dollar amount). If you fail to respond within 10 days or if the check is for a large amount (say > $800) then the merchant can forward the check to the county DA. The DA sends then sends you a notice. If you ignore that notice they issue a warrant for your arrest. They may just come get you as they did with a girl at work because she wrote 18 bad checks within 2 weeks (she tried to skim money off the books to pay so she also got fired).

This can happen for any type of returned check--NSF, account closed, missing signature, refer to maker etc

 

lb wrote:

"A lot of contracts state they can charge a fee for returned checks .
I beleive such a clause is not legal because as far as i can determine there is no law against returned checks.
If there is no such law -then how can such a clause be enforceable?"

There's no law against being late with a credit card payment either, but a fee is still assessed.

I'm having problems tracing the root of your complaint. Not being rude, just getting confused.

 

That is a situation between you and your phone company. It doesn't seem that the bank is at fault. The phone company sounds like the problem in that specific scenerio.

 

lb,

you said:

A lot of contracts state they can charge a fee for returned checks .
I beleive such a clause is not legal because as far as i can determine there is no law against returned checks.
If there is no such law -then how can such a clause be enforceable?
*********************
my answer:
if it is part of your contract, they can do it. every clause in every contract is enforceable. it does not have to be illegal to bounce or return a check, in order for a bank or company to charge a fee for it.

if you don't like the contract, don't agree to it in the first place. that is all you can do.

I still can't figure out what happened - what are the details?

breeze

 

Well, that's logical to not pay a returned check fee if there's money in the account.

I can hardly balance my own checkbook, and I bank at a large bank, but think I've only been charged twice for returned check fees over 7 years. If the $$ is there, no problem should exist.

 

Have you considered switching banks?

There are a ton of options here...just sounds like you've run across a nasty situation.

 

Well if your bank rejects a properly written check drawn on your account for NSF and you had sufficient collected funds in your account at the time, then your bank was in error and they should assist you in making restitution.

In the simplest terms, "collected funds" means funds that are readily available to you for cash withdrawal. I've noticed that banks here in the East tend to be hold happy when it comes to depositing checks. You could deposit someone's personal check from a bank across the street and if you don't have enough funds in your account to cover that check, they'll slap a 1-3 day hold on the funds! Don't even ask about immediate withdrawal for a check from across the country! Also, you have other factors...suppose you make a deposit after the 2pm banking day closes, your funds are then not available until the morning 2 days later instead of the next morning. Also, some banks had a practice of taking all the checks due to clear over night and then paying them from highest amount to lowest. What's the difference? Well if you don't have enough to cover all of them, then paying the largest checks first creates more overdrafts and thus NSF fees. Another factor could be check/ATM card usage. Some banks will subtract these transactions from your collected/available funds until it posts to your account or is canceled/released. If you check your account balance, the ATM may show $2000 but your available balance is $1900 because of a transaction at CompUSA.

I was on the receiving end of this kind of screwup: I did some web design for a friend's business and she paid me with a check from her business account. Two days prior she used her check card at a hotel and they did the usual hold process. Now when she checked out she paid cash for the room. The hotel should have electronically released the hold automatically when she paid cash and they did (welll the computer did). The problem is her bank doesn't recognize those types of holds right away, it takes 3 days or so. The only way to speed that up is to cancel the authorization entirely by having the merchant in question fax bank operations the request on company letterhead. (We found that out later.)

So what happens? When I put the check into my account, my bank made the funds available to me instantly. Then wrote several checks and sent them out. Her check hit her bank account and since the collected funds in her account were not enough to cover the check, her bank returned the check marked NSF and charged her a fee. Now mind you this is inspite of an agreement she has with the bank that allows her to overdraw her account by no more than $2000. Then things snowballed. The next day 2 of the checks I wrote clear my account. The day after that her check came back and my bank deducted the amount and charged me $5. This is in accordance with the banking agreement I have with my bank. The day after that other checks I wrote came in and were returned marked NSF and I'm assessed a $25 fee for each one! Again, my banking agreement says they can do this. My only saving grace was that I called that same day when she heard about the hotel hold and my bank gave me the NSF fees back.

Technically her bank was at fault for returning her check. Because of this, she could have (and did) compel them to give her back the NSF fee for returning her check. She could have also forced them to pay my bank's $5 fee for my returned deposit item fee since it was due to her bank's error and the fee was a primary affect of her bank's error. It would have been a stretch to make them pay my bank's $25 NSF fees since those were secondary affects but it could have been done.

This was not the first time her bank f'ed up that badly which is why she no longer has any of her accounts there. As the saying goes, if you don't like the terms or the service, vote with your $$$ and your feet.