Whereas bad checks are less of a problem when your customer base is mostly commercial as opposed to consumer, the potential is always there and you should be prepared to deal with bad checks when and if you receive them. Having the best collection letter is the most important thing.
Avoidance
Nearly 90% of bad checks are drawn on accounts less than one year old. Be suspicious of checks that have a number less than 125 or no number printed on it at all. Check the date and don’t deposit a check that is postdated — it may be defensible under Bad Check Statutes. Also, don’t ask for a post-dated check in response to a customer who “won’t have the check for two weeks.” In many states the criminal provisions regarding bad checks do not apply to post-dated checks. The reason is post-dated checks are a promise to pay in the future, they are not technically viewed as checks within the scope of most states’ bad check laws.
When You Receive a Bad Check
The first thing, of course, is to call the customer and let him know his check bounced and ask him if you should ask your bank to re-deposit the check. If you can’t reach the customer or if the check bounces again, your choices are to try collecting the monies yourself, asking your collection agency to help, or turning it over to your city or county’s bad check program for prosecution.
Keep the following in mind if you decide to collect the money yourself prior to calling in your outside collector or submitting to your city or county for prosecution:
• When mailing a bad check collection letter, make sure to put “Address Service Requested” underneath your return address. This is a valuable skip-tracing tool.
• If the customer offers to make good, accept only cash, money orders or cashier’s checks.
• Do not return the bad check to the check writer until you have received payment in full.
Summary of State Bad Check Laws
There are several variables, which differ by state, and you will need the particulars for your state in order to complete the sample bad check letter that follows. Contact Stevens & Ricci for a supplement to this CMS Series for your state. We’ll e-mail, fax, or mail the following for your state:
• Service fees allowed by statute
• Number of days you must wait after giving written notice to proceed as per statute
• Civil penalties provided by statute
• Amount of bad check that constitutes a felony
• Amount of bad check that constitutes a misdemeanor
Download the full tutorial at the Stevens & Ricci Resource Center. This will include a sample template letter in MS Word along with a summary of each state’s bad check laws.
Tags: Bad Check Letter
