Check & Insufficient Funds (NSF) Crimes (2024)

FAQs

Check & Insufficient Funds (NSF) Crimes? ›

Penal Code 476a PC makes it a crime to write or pass a bad check (knowing that there are or will be insufficient funds in the account). The offense can be charged as a felony if the value of the bad checks is more than $950.00.

Writing a bad check is a crime if the check writer knew that there were insufficient funds to cover the check and intended to defraud you. It is also a crime to forge a check or write a fake check.

“Insufficient funds” not only results in additional fees but can also cause legal concerns. Knowingly issuing multiple bad checks or in large values may lead to criminal charges. In some jurisdictions, the criminal charge for insufficient funds involves fraud.

The bounced check will be returned to you, and you'll likely be subject to an overdraft fee and/or a nonsufficient funds fee. Is it illegal to bounce a check? It is a crime to knowingly write a check that will bounce. You could be charged with a misdemeanor or a felony for writing bad checks.

As stated above, writing or passing bad checks in violation of California Penal Code 476a is a “wobbler” crime that can be filed as either a misdemeanor or felony case. A prosecutor will typically base their decision of the severity of the crime and your prior criminal record.

Statute 18 U.S.C. § 336 makes it a federal crime to issue “any note, check, memorandum, token, or other obligation for a less sum than $1” in lieu of money. The Feds probably won't bust down your door for breaking this rule, according to Chase.

Non-sufficient funds, or insufficient funds, is a banking term used to indicate that the checking account does not have sufficient balance to cover a transaction or payment. Having a non-sufficient funds situation can lead to penalties, a bad impact on one's credit score, and a criminal liability.

When a check bounces, it is not honored by the depositor's bank and may result in overdraft fees and banking restrictions. Additional penalties for bouncing checks may include negative credit score marks, refusal of merchants to accept your checks, and potentially legal trouble.

The bank takes it back out of your account, plus a fee. A check is essentially an IOU. So, if it's no good, then it's your issue to go after the money. Many time, bank will re-submit the check to the issuing party's bank for payment.

If you don't know about an overdrawn account or ignore it, the bank could eventually take legal action against you. The amount your account is overdrawn is a legal debt you owe, which means the bank can sue you and use legal remedies such as wage garnishment to get the money.

What is the difference between a bounced check and insufficient funds? ›

The difference between a bounced check and an overdraft is that while a bank may cover a transaction with insufficient funds (and charge an overdraft fee for doing so), the same bank likely won't cover a bounced 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.

A bad check is also known as a hot check and writing one is illegal. Banks normally charge a fee to anyone who unintentionally writes a bad check. The punishment for trying to pass a bad check intentionally ranges from a misdemeanor to a felony.

A person may face between 180 days to two years in a state jail and a fine up to $10,000. Some states have treble, or triple, damages so that a person will have to pay three times the face value of the check, subject to certain minimum or maximum payments.

If you send a demand letter but are not paid, you can sue for the amount of the check plus three (3) times that amount in damages. The least amount of damages you can ask for is $100 and the most is $1,500.

After you find out that the check bounced, contact the bank. Even though the check bounced at one time, there might be sufficient funds now. Ask if the bank can try depositing the check again. If there still aren't sufficient funds in the customer's account, ask the bank if they can do an enforced collection.

Writing bad checks can cause a variety of problems. You may have to pay significant fees, you could lose the ability to write checks in the future, you risk legal issues, and your credit can suffer. Learn what can go wrong if you write a check for more than you have in your bank account.

However, if you first send a demand letter and are not paid within 30 days then pursuant to California Civil Code Section 1719, you can sue for the amount of the bad check plus three (3) times that amount in damages (up to $1,500).

Ink Color on Checks

Signing a check or endorsing the back of a check in red ink could trigger trouble by delaying payment of the check. In extreme instances of fraud prevention, it could even void the check's validity. “Red ink has been considered a warning color since the Cold War era,” says Angleton.