Bounced checks - no more callin the bank!


SGF, Supreme Grumble Framer
Jun 7, 2004
A customer bounced a $400 check this week. In the past (the past being 6 weeks ago) I would call the customer's bank and ask them if the funds were available for redeposit. I called Key Bank today and they said no more, due to new privacy laws banks are not allowed to give out that information anymore. Personally, I think she was bs-ing me. I haven't asked my bank if this is true yet.

For this instance though it really removes a convenience. Now I have to either redeposit the check or contact my customer. If I redeposit it, it may bounce again costing my customer who knows maybe $25 or $30 extra dollars and costing me $20 more. If I call her she's probably going to be embarrased.

How much privacy are they violating here? I KNOW she didn't have enough in her account when the check was presented for payment. They know I know, and they can verify who I am because I have the exact amount and check number. I have a claim on that money. Then again, if I deposit it again blindly and it bounces again the banks make another $40 or $50 on us.

You're right. Your customer WILL be embarrassed -- and he/she SHOULD be! We have only had 3 bounced checks in 4 years in business and 2 of 3 customers were very embarrassed, resolved the problem quickly and have been back since. (The third resolved the problem but only spent 15 bucks and was pretty grumpy so we don't care that she hasn't been back! ;) ) Just call them up, be sweet as honey and explain what has happened. If your customer is a good one he/she will be in to fix the problem ASAP. And make sure to charge them that returned check fee. You shouldn't have to eat profits because of your customer's mistake.
I also haven't had many bounced checks in the past 7 years but what I usually do is call the issuing bank (I guess that's out now) and if the funds are available I would go to that bank and they will issue a cashiers check for the amount of the bounced check. I like that because it's free (at least it was in the past) and I have my money immediately. If all else fails just call the customer and don't make a big deal of it. They probably already know about it but are just to embarrased to contact you.

Hope this helps.

Leigh Ann
Most important thing is when you call the customer, DO NOT discuss the problem with any one other than the person who actually wrote the check, even if the person claims to be his/her spouse. Same is true for any debt collection, only person you can discuss it with is the actual debtor. Just leave a message and have the proper party call you back.

This is the law in most states, if not all of them. Bill collectors can not tell anyone about the debt except the debtor. Small business used to staple bad checks to the wall, for all to see. No more, they can be sued for doing it.

Anytime I receive payment in the form of a check that is drawn on a local bank and question whether the check will clear, I endorse the back of the check and take it to be redeemed for cash. If there isn't adequate funds, they simply return the check with no fees incurred by me or the person who wrote the check. I've had to hang on to a couple checks for a couple months and would go to the bank regularly to see if it would clear; but I've always managed to get my money - I would be sure and go the first of the month when people are most likely depositing a pay check.
What I'm going to do is write a letter asking her to email back or call if it's okay to redeposit, giving her 10 days to respond. I'll enclose the same payment-over-time agreement we use for expensive artwork and framing purchases to give her the option to pay it over 6 months on a credit card. She spent $800 on a couple frames and her deposit cleared ok, I have room to be empathetic.

I just think it's stupid that the bank won't give me a head's-up.

6 weeks ago I called a different bank about a different client and the check hadn't even bounced yet. The customer had a history that suggested I take a prudent course. Sure enough, had I deposited the check it would have bounced. I waited 2 days and all was well - saved both of us fees and frustration.
I've tried the cash or cashiers check thing and was turned away because the check is written out to a corporation. They think I'm trying to steal the cash.

FWIW, I get about 10 to 15 bounced checks a year. One location is in a mall. For me, mall locations tend to get more bounced checks and credit card chargebacks. Refunds too. Last week I had someone come in and request a refund on a special ordered item he's had in layaway for 14 months and only owed another $30 on. Tax time is tough! It tough in Ohio in general, Cleveland in particular.
You may also want to contact your bank - explain the situation. You can verify the validity and get details on this 'new' policy. It may be that the bank of first deposit can contact the other bank and verify funds. They may be able to help you in some way. Just a thougth.....

Sorry to be blunt here but it's time to toughen up.

If somebody is writing a bad check you give them a certain amount of time (1-2 days) and if it isn't paid then turn it over to a collection agency or file small claims. Let them know what you will do up front if they do not pay and then make sure you do what you say you will do. Some will say "you should work with them, they are yor customer", I say, That customer just stole from you and they will do it again if nobody does anything about it.

A collection agency will put a bad mark on their credit if they do not pay. If you file small claims court, more than likely they will not show and then you file a lein on their home and when they sell their home you get your money, if you filed your lein correctly.

As for your layaway for 14 months, all I have to say is shame on you for letting it go for that long and double shame on you if you don't have a no refund clause on your layaway form, you do have a form they sign don't you?
You can take a check made out to any business to the bank on which it is drawn and they will issue you a cashiers check made out to your business (not you personally) that you can deposit into your account without any fear of it not being honored. I have done this on many occasions and never had a problem. You just take the check in question to the bank and they will verify funds and issue the check to you. Simple.

As for collections, in most states you must notify them in writing of your intentions. And I believe the minimum lag time is ten days, not just one or two days.

Small claims court is really not the place for a bad check if you want your money. You turn it over to the police, who will issue a warrant. On some occasions, the warrant will be for their arrest. If they are habitual, especially. They would then have to post bond or stay in jail. But at any rate, with the police involved, the will get a court date to which if they do not show up, they will be arrested for contempt of court. Most people wouldnt let it go this far. At the court hearing the money must be paid. Period. Then the state will issue the funds to you.

I have tried alternate ways to collect bad checks, but the police route always wakes them up if they are "letting it sit." All we have to do is write them a certified letter telling them they have ten days to pay up. When they dont, we go to the police and start the paperwork. Havent had to do this many times, but it is 100% effective.
Check your state laws to see when and if the police will get involved. Here the law says that the person must "intentionally" write the check "knowing" that there were not funds available. The police will not get involved unless you can prove that they did this "intentionally"

Frederick is correct on the lag time being around 10 days, most people do not know this and if you say you are turning it over to colections in 2 days, most will be there with cash in hand the next day.

Always go to the issuing bank to try to redeposit first, they will either issue a check or you may be able to get them to tel you that you shouldn't waste your gas and make the drive again. (They can't tel you anything about the client's account, but they may give you a hint like that if you ask the right question)

Remember a bad check is a way for a person to steal from you, most will pay you within the next couple days because it was not done intentionally. If it is not paid n a week, write it off and let a collection agency do the work, they don't get paid unless they collect.
Why accept cheques in this day and age? We do not accept cheques unless they are from a major corporation. That is what Interac is for.
Good advice which I agree with most all. I don't agree that it is correct to assume the person is robbing you...innocent mistakes do happen...especially the way banks hold funds now.

Usually a customer will know about the check bouncing before you call them as they get notified also. I have personally had this happen and I immediately called the merchant and profusely apologized and offered to take the cash to them with whatever fees were charged by their bank. They were shocked I called before they knew the check was NSF and waived any fees and just redeposited the check for me.

I usually call the customer and tell them I'm embarrassed to have to call about their check and they may want to call their bank to find out what happened. As long as they tell me they will be in to take care of it within a few days I don't sick the police or prosecutor after them. If they don't come in within the specified time, I send out the letter required by our county prosecutor quoting the state statute on bad checks with a nice cover letter stating that we need to get this taken care of. Until you officially notify them in this manner, the wheels of justice don't start turning.

Our past prosecutor in Indiana where I used to be had a program where you just sent the check to them and they collected on it plus a $ 35.00 fee which was sent to us with the funds when they collected the check! Our NSF check count went way down under his watch. The new prosecutor dropped the program after he was elected.

I once had a prosecutor tell me they won't even pursue anyone unless the check is $ 100.00 or more. "So", I said, "a person can write $ 90.00 checks all day with impunity?" "Yes.", he said. Amazing.

If I catch someone shop lifting a $ 1.00 item or give me a NSF $ 5.00 check, I consider it my duty to pursue the matter even though it cost me far more. If I don't, my neighbor's the next victim.

As long as we are on the subject, when you take a traveler's check always check the top of the check to make sure it says U.S. Dollars. Several times over the years I became lax and got taken. Once a customer made a $ 4.00 to 5.00 purchase, paid with a $ 100.00 Canadian Traveler's check and received back U.S. Dollars. The check was only worth around $ 70.00 U.S. Got taken for $ 30.00 + the cost of the merchandise.

Another time I saw the scam coming and gave back change after mentally figuring the exchange rate. The young lady customer never challenged or asked what happened, but scurried red faced out of the store as fast as possible.

If crooks would use their crafty talents for honest gain they'd probably be better off. I think some people get a thrill out of "pulling one off".

One more piece of levity...

A very prestigious university in northern Indiana had a large number of exchange students. We received a NSF check from one and, upon calling her, she exclaimed "That's impossible! I still have checks left in my checkbook!" Poor protected girl...or should I protected girl. Ah, and some of us have to work for a living.

Watch out now. Beware of soft-shoed peddlers...

Dave Makielski
Originally posted by johnny:
If I redeposit it, it may bounce again costing my customer who knows maybe $25 or $30 extra dollars and costing me $20 more. If I call her she's probably going to be embarrased.
Do you mean that if you redeposit & it clears you DON'T contact your customer? Do you not charge a fee for all returned checks? First call should be to the customer -- redeposit if they want you to, but make sure they know they will pay a returned check fee EACH TIME the check is returned.
Originally posted by lise:
Why accept cheques in this day and age?
In this day and age, WHY NOT accept any legal form of payment? (OK, maybe not barter for chickens....unless you know how to kill and dress a chicken.)
Originally posted by lise:
Why accept cheques in this day and age?

Because I've had very, very little problem with checks not clearing and it doesn't cost me money like running credit cards.
We used to call customers when their checks bounced - and we would always get some song & dance about how the bank goofed or the dog ate their deposit slips or some other excuse. It would take several days & sometimes weeks & more phone calls before we got paid.

When the banks started charging a fee to OUR account because our customer bounced a check, we started enforcing the $20 charge that we had posted at the cash register. ($20 is the maximum that a retailer can charge in Penna). I also stopped making phone calls - we sent out a certified letter ($4.63) informing them that they had ten days to make good on the check w/ cash or a money order (not another rubber check - LOL). If they didn't respond after 25 days, we turned the check (w/ proof of receipt of mailing) over to the local magistrate who, filed criminal charges.
Do I worry about P***ing off a customer? -

NO ! ! !

Those customers I don't need (who does?)