Cashing in on Bad Checks

Profile ImageBy: Matthew M. Young, Attorney

As a financial institution, credit unions expect to incur certain losses for members who pass bad checks; however, it is critical to utilize methods available in the law to curb such abuse. In Ohio and most states, such activity qualifies as a criminal act and is compensable with treble damages and attorney’s fees. Keep in mind, anyone who endorses a bad check (either as the drawer or subsequent signatory on the back of a check) is presumed to have committed a theft offense if they do not make the check good within ten days after being notified of the check’s dishonor.

As a prerequisite to filing a complaint and obtaining a judgment for treble damages and attorney’s fees, a statutory letter must be sent giving the member thirty days to make agreeable payment arrangements. Often times, the letter is startling enough to induce the member to make payments. In cases where you must proceed with a lawsuit and judgment, obtaining a treble damage award with attorney’s fees helps to offset losses incurred in bad check transactions and also sends a message to the membership that it will not tolerate such activities.


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