Bad Check Laws by State

Payday lenders sometimes threaten borrowers with civil and criminal penalties under bad check laws. While this is an empty threat in most cases, it is never a bad idea to be aware of the laws in your state – especially if you plan to stop payment on a payday loan check. The National Check Fraud Center lists the civil and criminal penalties for passing bad checks.

From their website:

Bad checks, also known as NSF checks, bounced checks, rubber checks, insufficient checks… can be a big problem for an individual or for any size company. There are both civil and criminal penalties for this unlawful act, although it is much more costly and difficult to prove a criminal case.

Payday loan transactions are generally based on post-dated checks so the following (also from their website) is particularly interesting:

“Section 3-104(2)(b) of the UCC, defines a check as “a draft drawn on a bank and payable on demand.” A postdated check, since it is not payable on demand, does not satisfy this demand. Consequently, it has generally been held by most states that the giving of a post-dated check does not constitute a present fraud nor is it within the scope of the bad check laws. “

Please visit their website for details and always consult your lawyer in the event of a dispute.

Bad Check Laws by State (External Link)
(http://www.ckfraud.org/)