H.B. 301

1

CHECK ABUSE AMENDMENTS
2 2001 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: David L. Hogue
5 This act modifies provisions related to dishonored checks to expand time periods to respond
6 to notices of dishonor and to remove caps on damages.
7 This act affects sections of Utah Code Annotated 1953 as follows:
8 AMENDS:
9 7-15-1, as last amended by Chapters 100 and 171, Laws of Utah 1999
10 7-15-2, as last amended by Chapters 100 and 171, Laws of Utah 1999
11 Be it enacted by the Legislature of the state of Utah:
12 Section 1. Section 7-15-1 is amended to read:
13 7-15-1. Definitions -- Civil liability of issuer -- Notice of action -- Collection costs --
14 Exemptions.
15 (1) As used in this chapter:
16 (a) "Check" means a payment instrument on a depository institution including a:
17 (i) check;
18 (ii) draft;
19 (iii) order; or
20 (iv) other instrument.
21 (b) "Issuer" means a person who makes, draws, signs, or issues a check, whether as
22 corporate agent or otherwise, for the purpose of:
23 (i) obtaining from any person any money, merchandise, property, or other thing of value;
24 or
25 (ii) paying for any service, wages, salary, or rent.
26 (c) "Mailed" means the day that a notice is properly deposited in the United States mail.
27 (2) (a) An issuer of a check is liable to the holder of the check if:

28 (i) the check:
29 (A) is not honored upon presentment; and
30 (B) is marked "refer to maker";
31 (ii) the account upon which the check is made or drawn:
32 (A) does not exist;
33 (B) has been closed; or
34 (C) does not have sufficient funds or sufficient credit for payment in full of the check; or
35 (iii) (A) the check is issued in partial or complete fulfillment of a valid and legally binding
36 obligation; and
37 (B) the issuer stops payment on the check with the intent to:
38 (I) fraudulently defeat a possessory lien; or
39 (II) otherwise defraud the holder of the check.
40 (b) If an issuer of a check is liable under Subsection (2)(a), the issuer is liable for:
41 (i) the check amount; and
42 (ii) a service charge of $20.
43 (3) (a) The holder of a check that has been dishonored [may]:
44 (i) shall give written [or oral] notice of dishonor to the issuer of the check; and
45 (ii) may waive all or part of the service charge imposed under Subsection (2)(b).
46 (b) Notwithstanding Subsection (2)(b), a holder of a check that has been dishonored may
47 not collect and the issuer is not liable for the service charge imposed under Subsection (2)(b) if:
48 (i) the holder redeposits the check; and
49 (ii) that check is honored.
50 (4) If the issuer does not pay the amount owed under Subsection (2)(b) within [15] 30
51 calendar days from the day on which the notice required under Subsection (5) is mailed, the issuer
52 is liable for:
53 (a) the amount owed under Subsection (2)(b); and
54 (b) collection costs not to exceed $20.
55 (5) (a) A holder shall provide written notice to an issuer before:
56 (i) charging collection costs under Subsection (4) in addition to the amount owed under
57 Subsection (2)(b); or
58 (ii) filing an action based upon this section.

59 (b) The written notice required under Subsection (5)(a) shall notify the issuer of the
60 dishonored check that:
61 (i) if the amount owed under Subsection (2)(b) is not paid within [15] 30 calendar days
62 from the day on which the notice is mailed, the issuer is liable for:
63 (A) the amount owed under Subsection (2)(b); and
64 (B) collection costs under Subsection (4); and
65 (ii) the holder may file civil action if the issuer does not pay to the holder the amount owed
66 under Subsection (4) within 30 calendar days from the day on which the notice is mailed.
67 (6) [(a)] If the issuer has not paid the holder the amounts owed under Subsection (4) within
68 30 calendar days from the day on which the notice required by Subsection (5) is mailed, the holder
69 may offer to not file civil action under this section if the issuer pays the holder:
70 [(i)] (a) the amount owed under Subsection (2)(b);
71 [(ii)] (b) the collection costs under Subsection (4); and
72 [(iii) an amount that:]
73 [(A) is equal to the greater of:]
74 [(I) $50; or]
75 [(II) triple the check amount; and]
76 [(B) does not exceed the check amount plus $250; and]
77 [(iv)] (c) if the holder retains an attorney to recover on the dishonored check, reasonable
78 attorney's fees not to exceed $50.
79 [(b) (i) Notwithstanding Subsection (6)(a), all amounts charged or collected under
80 Subsection (6)(a)(iii) shall be paid to and be the property of the original payee of the check.]
81 [(ii) A person who is not the original payee may not retain any amounts charged or
82 collected under Subsection (6)(a)(iii).]
83 [(iii) The original payee of a check may not contract for a person to retain any amounts
84 charged or collected under Subsection (6)(a)(iii).]
85 (7) (a) A civil action may not be filed under this section unless the issuer fails to pay the
86 amounts owed under Subsection (4) within 30 calendar days from the day on which the notice
87 required by Subsection (5) is mailed.
88 (b) In a civil action, the issuer of the check is liable to the holder for:
89 (i) the check amount;

90 (ii) interest;
91 (iii) all costs of collection, including all court costs and reasonable attorneys' fees; and
92 (iv) damages[: (A)] equal to the greater of:
93 [(I)] (A) $100; or
94 [(II)] (B) triple the check amount[; and].
95 [(B) not to exceed the check amount plus $500.]
96 (c) If an issuer is held liable under Subsection (7)(b), notwithstanding Subsection (7)(b),
97 a court may waive all or part of the amounts owed under Subsections (7)(b)(ii) through (iv) upon
98 a finding of good cause.
99 [(d) (i) Notwithstanding Subsection (7)(b), all amounts charged or collected under
100 Subsection (7)(b)(iv) shall be paid to and be the property of the original payee of the check.]
101 [(ii) A person who is not the original payee may not retain any amounts charged or
102 collected under Subsection (7)(b)(iv).]
103 [(iii) The original payee of a check may not contract for a person to retain any amounts
104 charged or collected under Subsection (7)(b)(iv).]
105 (8) This section may not be construed to prohibit the holder of the check from seeking
106 relief under any other applicable statute or cause of action.
107 (9) (a) Notwithstanding the other provisions of this section, a holder of a check is exempt
108 from this section if:
109 (i) the holder:
110 (A) is a depository institution; or
111 (B) a person that receives a payment on behalf of a depository institution;
112 (ii) the check is a payment on a loan that originated at the depository institution that:
113 (A) is the holder; or
114 (B) on behalf of which the holder received the payment; and
115 (iii) the loan contract states a specific service charge for dishonor.
116 (b) A holder exempt under Subsection (6)(a) may contract with an issuer for the collection
117 of fees or charges for the dishonor of a check.
118 Section 2. Section 7-15-2 is amended to read:
119 7-15-2. Notice -- Form.
120 (1) (a) "Notice" means notice given to the issuer of a check [either orally or] in writing.

121 (b) Written notice may be given by United States mail that is:
122 (i) first class; and
123 (ii) postage prepaid.
124 (c) Notwithstanding Subsection (1)(b), written notice is conclusively presumed to have
125 been given when the notice is:
126 (i) properly deposited in the United States mail;
127 (ii) postage prepaid;
128 (iii) certified or registered mail;
129 (iv) return receipt requested; and
130 (v) addressed to the signer at the signer's:
131 (A) address as it appears on the check; or
132 (B) last-known address.
133 (2) Written notice under Subsection 7-15-1 (5) shall take substantially the following form:
134 Date: ____
135 To: _____
136 You are hereby notified that the check(s) described below issued by you has (have) been
137 returned to us unpaid:
138 Check date: ____
139 Check number: ____
140 Originating institution: ____
141 Amount: ____
142 Reason for dishonor (marked on check): ____
143 In accordance with Section 7-15-1 , Utah Code Annotated, you are liable for this check
144 together with a service charge of $20, which must be paid to the undersigned.
145 If you do not pay the check amount and the $20 service charge within [15] 30 calendar days
146 from the day on which this notice was mailed, you are required to pay [within 30 calendar days
147 from the day on which this notice is mailed]:
148 (1) the check amount;
149 (2) the $20 service charge; and
150 (3) collection costs not to exceed $20.
151 If you do not pay the check amount, the $20 service charge, and the collection costs within

152 30 calendar days from the day on which this notice is mailed, in accordance with Section 7-15-1 ,
153 Utah Code Annotated, an appropriate civil legal action may be filed against you for:
154 (1) the check amount;
155 (2) interest;
156 (3) court costs;
157 (4) attorneys' fees;
158 (5) actual costs of collection as provided by law; and
159 (6) damages in an amount equal to the greater of $100 or triple the check amount[, except
160 that damages recovered under this Subsection (6) may not exceed the check amount by more than
161 $500].
162 In addition, the criminal code provides in Section 76-6-505 , Utah Code Annotated, that any
163 person who issues or passes a check for the payment of money, for the purpose of obtaining from
164 any person, firm, partnership, or corporation, any money, property, or other thing of value or
165 paying for any services, wages, salary, labor, or rent, knowing it will not be paid by the drawee and
166 payment is refused by the drawee, is guilty of issuing a bad check.
167 The civil action referred to in this notice does not preclude the right to prosecute under the
168 criminal code of the state.
169 (Signed) _____________________________________________________________
170 Name of Holder: _______________________________________________________
171 Address of Holder: _____________________________________________________
172 Telephone Number: ____________________________________________________
173 (3) Notwithstanding the other provisions of this section, a holder exempt under Subsection
174 7-15-1 (9) is exempt from this section.




Legislative Review Note
as of 2-6-01 7:23 AM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel