If you or your bank erred, creating a bounced check situation, you can dispute it. You can dispute bounced check fees by following several steps. These include determining if the bank erred concerning the money in your bank account, accepting responsibility for the bounced check and asking for leniency, or requesting for a waiver based on the existing bank policies or your account history.
Who Gets Charged for a Bounced Check?
If you issue a bad check, you are responsible for the charges that arise from it. This usually happens when you, as the check writer, draws money from an account without enough funds or by associating the check with a non-existent account. Plus, you may also attract criminal charges.
What Is the Penalty for a Bounced Check?
According to the Cornell Law School’s Legal Information Institute, 26 CFR § 301.6657-1 of the Electronic Code of Federal Regulations states that the person who issues a bouncing check as payment of taxes shall pay a penalty of 1 percent of the amount of the check plus other penalties set out by the law. However, for checks worth $500 or less, the penalty will be $5 or the amount of the check, whichever is less.
For other payments, the issuing bank and the payee can both charge you additional check fees. Some may even take you to court, which will likely lead to additional legal fees.
Financial institutions such as Bank of America and Chase can charge you non-sufficient funds fees (NSF) or overdraft fees for drawing funds from an account with insufficient funds. The latter is common in accounts that have overdraft protection. The Consumer Financial Protection Bureau states that the average NSF fees or overdraft fees are $34 per transaction.
The Illinois Legal Aid Online website also states that if the payee takes you to court for issuing them with a bounced check, they could collect as much as three times the amount of the check.
Can the Fee Be Waived?
The fees you incur after issuing a bounced check could be waived in few circumstances. For example, based on 26 CFR § 301.6657-1 rules, if you write a bouncing check for taxes and prove to the district director that you wrote it in good faith and had reason to believe it would be honored, the penalties you incur may be set aside.
For other kinds of bounced checks, if you negotiate with the bank, it may agree to waive the bank charges.
How Can You Dispute a Bounced Check Fee?
Below are the steps you can take to dispute a bounced check fee.
Determine If the Bank Erred
Refer to your checkbook register to understand the transactions associated with your checking account and determine whether some of your money was sent to the wrong account, if there are any transaction errors the bank is responsible for, or if you incorrectly assumed you had more money than is available in the checking account.
Gather Your Evidence
If you determine that the bank erred, gather evidence, including your previous deposit slips and any other transaction documents that prove your case. In addition, review your checking or savings account agreement to familiarize yourself with the existing bank policies concerning overdrafts. Then check to determine whether you have the right to request for waivers in case of a first-time overdraft.
Contact Your Bank
It is best to visit your bank or credit union in person to dispute a bounced check even if you are responsible for the error. Ask to speak to the person in charge, present your case, provide evidence and ask the bank to write to the payee stating that you were not responsible for the bounced check. Then ask the bank to waive the check fees on that basis.
If you erred and bank policies offer a one-time waiver for overdrafts, ask the bank about the correct procedure for claiming it. You may have to write the request for the waiver to be effected. On the other hand, if such an offer doesn’t exist, you may need to negotiate a little.
In the latter case, you should speak to the bank manager, accept responsibility for the mistake and request for the waiver. Argue your case by stating that you have a good history with the bank and are a profitable client. Also, drop strong hints that you may move your account elsewhere. And if that fails, find a different branch and make similar requests.
If everything doesn’t work, pay the bad check fees and ensure that you never make the mistake again.
How Do Bounced Checks Affect You?
Of course, when your check bounces, you may have to pay extra fees that financial institutions, merchants and the government charge or the courts order. But you may also suffer other consequences.
Being charged extra fees you didn’t anticipate may affect your ability to pay other debts. That, in turn, may end up having a negative impact on your credit scores. Also, the merchant you wrote the check to may list you in the TeleCheck database.
This check acceptance company helps retailers screen people with bad check histories, making it difficult for them to accept checks from you in the future. In addition, a collection agency may be sent after you.
Your account may also be closed and you could get added to the ChexSystems® database, which helps banks screen potential account holders. So, you may find it challenging to open a new account in the future.
- Cornell.Edu: 26 CFR § 301.6657-1 - Bad checks.
- Consumer Financial Protection Bureau: Consumers on course to save $1 billion in NSF fees annually, but some banks continue to charge these fees
- Illinois Legal Aid Online: What happens if my bad check causes a check to bounce?
- TeleCheck: Welcome to TeleCheck
- CheckSystems: HOme
- You can eliminate overdraft fees for one-time debit card purchases by opting-out of your bank's standard overdraft procedures. This means your bank will not approve any over-limit debit card purchases and that you incur no overdraft or non-sufficient funds fees when you attempt to make debit card purchases without having funds in your account. However, you cannot opt-in or out of fees for check processing, although many banks offer overdraft protection in the form of a linked credit card or savings account.
- In many states you actually violate state law when you write a check without having sufficient funds in your account to cover the check. Therefore, even though some banks waive penalty fees as a courtesy, many other banks strictly enforce these fees. Additionally, federal laws do not limit the amount a bank can charge you for bouncing a check. As a rule, most banks attempt to re-deposit bounced checks the following business day, and a bank can charge you a second overdraft fee if the check bounces for a second time.
I hold a BS in Computer Science and have been a freelance writer since 2011. When I am not writing, I enjoy reading, watching cooking and lifestyle shows, and fantasizing about world travels.