If you accept a check from your customer that is later returned for insufficient funds, North Carolina law provides a variety of fees and charges which you may recover. The North Carolina General Statutes provides that a creditor who receives a check which is returned for insufficient funds may recover not only the principal amount of the check but also processing fees and bank service fees.

Processing Fee
North Carolina General Statute 25-3-506 provides for the collection of a processing fee for returned checks. The statute provides in part that a person who accepts a check in payment for goods or services may charge and collect a processing fee, not to exceed twenty-five dollars ($25.00), for a check on which payment has been refused by the bank of the check writer because of insufficient funds or because the check writer did not have an account at the bank.

Bank Service Fees
North Carolina law also allows for the recovery of the bank service fee which is charged to the creditor for the customer’s returned check.  North Carolina General Statute 6-21.3 provides in part that “a person, firm, or corporation who knowingly draws, makes, utters or issues and delivers to another any check or draft drawn on any bank or depository that refuses to honor the same because the maker or drawer does not have sufficient funds on deposit in or credit with the bank or depository with which to pay the check or draft upon presentation” that such check writer shall be liable for any bank service fee charged by the bank for such returned check.

Possible Treble Damages and Criminal Charges
North Carolina law also provides a process whereby the creditor may notify the check writer of the returned check and give notice to the check writer that if the check is not fully paid according to the statute, the check writer may be liable for three times the amount of the check but not to exceed $500.00 or be less than $100.00.

There is also the possibility of submitting the check to the District Attorney for prosecution of the returned check as criminal activity.  Depending upon the amount of the check and facts surrounding the issuance of the check, many times having the District Attorney involved for the criminal charges creates a great incentive to have the check paid faster. The creditor may elect to proceed simultaneously with the criminal charges and civil remedies referenced above. However, the creditor may only recover the check amount plus associated fees and charges one time from the check writer.

If you have any questions regarding this process, please feel free to contact our firm.