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S.B. 180 Enrolled

    

MERCHANT OR SERVICE PROVIDER CHARGE

    
FOR DISHONORED CHECKS

    
1997 GENERAL SESSION

    
STATE OF UTAH

    
Sponsor: John P. Holmgren

    AN ACT RELATING TO FINANCIAL INSTITUTIONS; INCREASING THE DISHONORED
    CHECK SERVICE CHARGE FOR MERCHANTS OR SERVICE PROVIDERS; AND
    MAKING TECHNICAL CORRECTIONS.
    This act affects sections of Utah Code Annotated 1953 as follows:
    AMENDS:
         7-15-1, as last amended by Chapters 52 and 128, Laws of Utah 1988
         7-15-2, as last amended by Chapters 52 and 128, Laws of Utah 1988
    Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 7-15-1 is amended to read:
         7-15-1. Civil liability of issuer -- Notice of action -- Collection costs.
        (1) Any person who makes, draws, signs, or issues any check, draft, order, or other
    instrument upon any depository institution, whether as corporate agent or otherwise, for the
    purpose of obtaining from any person, firm, partnership, or corporation any money, merchandise,
    property, or other thing of value or paying for any service, wages, salary, or rent is liable to the
    holder of the check, draft, order, or other instrument if:
        (a) the check, draft, order, or other instrument:
        (i) is not honored upon presentment; and
        (ii) is marked "refer to maker"; or
        (b) the account upon which the check, draft, order, or other instrument has been made or
    drawn:
        (i) does not exist[,];
        (ii) has been closed[,]; or
        (iii) does not have sufficient funds or sufficient credit for payment in full of the check,
    draft, or other instrument.


        (2) (a) The holder of the check, draft, order, or other instrument [which] that has been
    dishonored may:
        (i) give written or verbal notice of dishonor to the person making, drawing, signing, or
    issuing the check, draft, order, or other instrument; and [may]
        (ii) impose a service charge that may not exceed [$15] $20.
        (b) Notwithstanding Subsection (2)(a), a holder of a check, draft, order, or other instrument
    that has been dishonored may not charge the service charge permitted under Subsection (2)(a) if:
        (i) the holder redeposits the check, draft, order, or other instrument; and
        (ii) that check, draft, order, or other instrument is honored.
        (3) Prior to filing an action based upon this section, the holder of a dishonored check, draft,
    order, or other instrument shall give the person making, drawing, signing, or issuing the dishonored
    check, draft, order, or other instrument written notice of intent to file civil action, allowing the
    person seven days from the date on which the notice was mailed to tender payment in full, plus the
    service charge imposed for the dishonored check, draft, order, or other instrument.
        [(3)] (4) In a civil action, the person making, drawing, signing, or issuing the check, draft,
    order, or other instrument is liable to the holder for:
        (a) the amount of the check, draft, order, or other instrument;
        (b) interest; and
        (c) all costs of collection, including all court costs and reasonable attorneys' fees.
        [(4)] (5) As used in this section, "costs of collection" includes reasonable compensation, as
    approved by the court, for time expended if the collection is pursued personally by the holder and
    not through an agent.
        Section 2. Section 7-15-2 is amended to read:
         7-15-2. Notice -- Form.
        (1) (a) "Notice" means notice given to the person making, drawing, or issuing the check,
    draft, order, or other instrument either in person or in writing.
        (b) A written notice is conclusively presumed to have been given when properly deposited
    in the United States mails, postage prepaid, by certified or registered mail, return receipt requested,

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    and addressed to the signer at [his] the signer's address as it appears on the check, draft, order, or
    other instrument or at [his] the signer's last-known address.
        (2) Written notice as applied in Subsection 7-15-1[(2)](3) shall take substantially the
    following form:
        Date: ____
        To: _____
        You are hereby notified that the check(s) described below issued by you has (have) been
    returned to us unpaid:
        Instrument date: ____
        Instrument number: ____
        Originating institution: ____
        Amount: ____
        Reason for dishonor (marked on instrument): ____
        This instrument, together with a service charge of [$15] $20 must be paid to the undersigned
    within seven days from the date of this notice in accordance with Section 7-15-1, Utah Code
    Annotated [1953], or appropriate civil legal action may be filed against you for the amount due and
    owing together with [service charges,] interest, court costs, attorneys' fees, and actual costs of
    collection as provided by law.
        In addition, the criminal code provides in Section 76-6-505, Utah Code Annotated [1953],
    that any person who issues or passes a check for the payment of money, for the purpose of obtaining
    from any person, firm, partnership, or corporation, any money, property, or other thing of value or
    paying for any services, wages, salary, labor, or rent, knowing it will not be paid by the drawee and
    payment is refused by the drawee, is guilty of issuing a bad check.
        The civil action referred to in this notice does not preclude the right to prosecute under the
    criminal code of the state of Utah.
        (Signed)     _____________________________________________________________
        Name of Holder:     _______________________________________________________
        Address of Holder:     _____________________________________________________

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        Telephone Number:     ____________________________________________________

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