Business Law 101 / Worthless Checks

By Albert L. Kelley, Esq.

Little is more frustrating than to deposit a check into your bank account only to learn days later that there are insufficient funds to cover the check. Aside from realizing that funds you had relied on are now missing from your account, you also must go through the process of trying to collect on the funds from the worthless check. Luckily, there are various means to do this, so long as you have taken the necessary precautions.

The first alternative, so long as you have a valid address for the person who wrote the check, is to file suit. If the amount of the check is less than $5000, this can be done through Small Claims Court; from $5000-$15,000 in County court; above $15,000 in circuit court. The worthless check alone is sufficient grounds to file suit, however, you may also have issues of breach of contract. Unless there is a written contract that allows for the payment of attorney fees, the court will not award you attorney fees for collection on the worthless check. The court may award you your filing fees as additional damages. Unfortunately, just because you obtained a judgment in court for the worthless check, that does mean you will collect the funds. You still have to go through the collection process if the person who wrote the check does not voluntarily make payment. This will increase the cost and time of collection.

There is a second alternative that may be more effective in returning the funds to you. The Monroe County State Atty.’s office has a special division for worthless check recovery. The division only handles checks that were received within Monroe County. In Florida, writing a worthless check is a crime (it should be noted that there is a difference between a worthless check and a stop payment order. A worthless check means there are insufficient funds in the account to cover the check or the account has been closed. The stop payment order is an instruction to the bank not to pay a particular check. Stop payment orders usually must be resolved through the civil courts). Based on the amount of the check, a worthless check is either a first-degree misdemeanor punishable by up to one year in jail or a 3rd degree felony punishable by up to five years in state prison. To avoid jail time, the state attorney’s office allows offenders to make good on their worthless check. This option usually allows a faster and more efficient recovery of the funds as the threat of jail time creates leverage that does not exist in the civil court system. In order to qualify for the worthless check recovery program, anyone accepting a check must take certain steps to protect themselves. First, ask the person writing the check for their driver’s license. Look at the picture and signature on the license to make sure it is the same person who is writing the check. If they do not have a driver’s license you may use any other state issued photo identification card. Do not rely on nongovernment issued identification. Write the driver’s license number (or identification card number) and state of issuance on the front of the check. You also want to confirm the name and address, and if you can, obtain the date of birth, sex, race, height, home phone, place of employment, and business phone. While this additional information is not necessarily crucial, it will assist the state in prosecuting the offender. Do not take any post-dated checks or third-party checks, or agree to hold a check for any period of time, as these cannot be resolved by the worthless check recovery program. Before contacting the state attorney’s office, you should send a 15 day certified letter to the person who give you the worthless check, giving them the opportunity to make good on the check. The purpose of the letter is not just to speed recovery, but to allow you to receive additional statutory fees, to strengthen the prosecutor’s case, and to give you immunity from a civil action for wrongful prosecution.

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is also the author of “Basics of Business Law” “Basics of Florida’s Small Claims Court” and “Basics of Florida’s Landlord/Tenant Law” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.