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7 LONG TITLE
8 General Description:
9 This bill modifies provisions related to dishonored instruments.
10 Highlighted Provisions:
11 This bill:
12 ▸ clarifies the action that initiates a civil action against an issuer of a dishonored
13 check.
14 Money Appropriated in this Bill:
15 None
16 Other Special Clauses:
17 None
18 Utah Code Sections Affected:
19 AMENDS:
20 7-15-1, as last amended by Laws of Utah 2008, Chapter 96
21 7-15-2, as last amended by Laws of Utah 2010, Chapter 324
22
23 Be it enacted by the Legislature of the state of Utah:
24 Section 1. Section 7-15-1 is amended to read:
25 7-15-1. Definitions -- Civil liability of issuer -- Notice of action -- Collection costs
26 -- Exemptions.
27 (1) As used in this chapter:
28 (a) "Check" means a payment instrument on a depository institution including a:
29 (i) check;
30 (ii) draft;
31 (iii) order; or
32 (iv) other instrument.
33 (b) "Issuer" means a person who makes, draws, signs, or issues a check, whether as
34 corporate agent or otherwise, for the purpose of:
35 (i) obtaining from any person any money, merchandise, property, or other thing of
36 value; or
37 (ii) paying for any service, wages, salary, or rent.
38 (c) "Mailed" means the day that a notice is properly deposited in the United States
39 mail.
40 (2) (a) An issuer of a check is liable to the holder of the check if:
41 (i) the check:
42 (A) is not honored upon presentment; and
43 (B) is marked "refer to maker";
44 (ii) the account upon which the check is made or drawn:
45 (A) does not exist;
46 (B) has been closed; or
47 (C) does not have sufficient funds or sufficient credit for payment in full of the check;
48 or
49 (iii) (A) the check is issued in partial or complete fulfillment of a valid and legally
50 binding obligation; and
51 (B) the issuer stops payment on the check with the intent to:
52 (I) fraudulently defeat a possessory lien; or
53 (II) otherwise defraud the holder of the check.
54 (b) If an issuer of a check is liable under Subsection (2)(a), the issuer is liable for:
55 (i) the check amount; and
56 (ii) a service charge of $20.
57 (3) (a) The holder of a check that has been dishonored may:
58 (i) give written or oral notice of dishonor to the issuer of the check; and
59 (ii) waive all or part of the service charge imposed under Subsection (2)(b).
60 (b) Notwithstanding Subsection (2)(b), a holder of a check that has been dishonored
61 may not collect and the issuer is not liable for the service charge imposed under Subsection
62 (2)(b) if:
63 (i) the holder redeposits the check; and
64 (ii) that check is honored.
65 (4) If the issuer does not pay the amount owed under Subsection (2)(b) within 15
66 calendar days from the day on which the notice required under Subsection (5) is mailed, the
67 issuer is liable for:
68 (a) the amount owed under Subsection (2)(b); and
69 (b) collection costs not to exceed $20.
70 (5) (a) A holder shall provide written notice to an issuer before:
71 (i) charging collection costs under Subsection (4) in addition to the amount owed under
72 Subsection (2)(b); or
73 (ii) [
74 (b) The written notice required under Subsection (5)(a) shall notify the issuer of the
75 dishonored check that:
76 (i) if the amount owed under Subsection (2)(b) is not paid within 15 calendar days
77 from the day on which the notice is mailed, the issuer is liable for:
78 (A) the amount owed under Subsection (2)(b); and
79 (B) collection costs under Subsection (4); and
80 (ii) the holder may [
81 holder the amount owed under Subsection (4) within 30 calendar days from the day on which
82 the notice is mailed.
83 (6) (a) Except as provided in Section 7-23-401, if the issuer has not paid the holder the
84 amounts owed under Subsection (4) within 30 calendar days from the day on which the notice
85 required by Subsection (5) is mailed, the holder may offer to not [
86 under this section if the issuer pays the holder:
87 (i) the amount owed under Subsection (2)(b);
88 (ii) the collection costs under Subsection (4);
89 (iii) an amount that:
90 (A) is equal to the greater of:
91 (I) $50; or
92 (II) triple the check amount; and
93 (B) does not exceed the check amount plus $250; and
94 (iv) if the holder retains an attorney to recover on the dishonored check, reasonable
95 attorney's fees not to exceed $50.
96 (b) (i) Notwithstanding Subsection (6)(a), all amounts charged or collected under
97 Subsection (6)(a)(iii) shall be paid to and be the property of the original payee of the check.
98 (ii) A person who is not the original payee may not retain any amounts charged or
99 collected under Subsection (6)(a)(iii).
100 (iii) The original payee of a check may not contract for a person to retain any amounts
101 charged or collected under Subsection (6)(a)(iii).
102 (7) (a) A [
103 this section unless the issuer fails to pay the amounts owed:
104 (i) under Subsection (4); and
105 (ii) within 30 calendar days from the day on which the notice required by Subsection
106 (5) is mailed.
107 (b) Subject to Subsections (7)(c) and (d) and except as provided in Section 7-23-401,
108 in a civil action the issuer of the check is liable to the holder for:
109 (i) the amount owed under Subsection (2)(b);
110 (ii) the collection costs under Subsection (4);
111 (iii) interest;
112 (iv) court costs;
113 (v) reasonable attorney fees; and
114 (vi) damages:
115 (A) equal to the greater of:
116 (I) $100; or
117 (II) triple the check amount; and
118 (B) not to exceed the check amount plus $500.
119 (c) If an issuer is held liable under Subsection (7)(b), notwithstanding Subsection
120 (7)(b), a court may waive any amount owed under Subsections (7)(b)(iii) through (vi) upon a
121 finding of good cause.
122 (d) If a holder of a check violates this section by [
123 under this section before 31 calendar days from the day on which the notice required by
124 Subsection (5) is mailed, an issuer may not be held liable for an amount in excess of the check
125 amount.
126 (e) (i) Notwithstanding Subsection (7)(b), all amounts charged or collected under
127 Subsection (7)(b)(vi) shall be paid to and be the property of the original payee of the check.
128 (ii) A person who is not the original payee may not retain any amounts charged or
129 collected under Subsection (7)(b)(vi).
130 (iii) The original payee of a check may not contract for a person to retain any amounts
131 charged or collected under Subsection (7)(b)(vi).
132 (8) This section may not be construed to prohibit the holder of the check from seeking
133 relief under any other applicable statute or cause of action.
134 (9) (a) Notwithstanding the other provisions of this section, a holder of a check is
135 exempt from this section if the holder is:
136 (i) a depository institution; or
137 (ii) a person that receives a payment on behalf of a depository institution.
138 (b) A holder exempt under Subsection (9)(a) may contract with an issuer for the
139 collection of fees or charges for the dishonor of a check.
140 Section 2. Section 7-15-2 is amended to read:
141 7-15-2. Notice -- Form.
142 (1) (a) "Notice" means notice given to the issuer of a check either orally or in writing.
143 (b) Written notice may be given by United States mail that is:
144 (i) first class; and
145 (ii) postage prepaid.
146 (c) Notwithstanding Subsection (1)(b), written notice is conclusively presumed to have
147 been given when the notice is:
148 (i) properly deposited in the United States mail;
149 (ii) postage prepaid;
150 (iii) certified or registered mail;
151 (iv) return receipt requested; and
152 (v) addressed to the signer at the signer's:
153 (A) address as it appears on the check; or
154 (B) last-known address.
155 (2) Written notice under Subsection 7-15-1(5) shall take substantially the following
156 form:
157 "Date: ____
158 To: _____
159 You are hereby notified that the check(s) described below issued by you has (have)
160 been returned to us unpaid:
161 Check date: ____
162 Check number: ____
163 Originating institution: ____
164 Amount: ____
165 Reason for dishonor (marked on check): ____
166 In accordance with Section 7-15-1, Utah Code Annotated, you are liable for this check
167 together with a service charge of $20, which must be paid to the undersigned.
168 If you do not pay the check amount and the $20 service charge within 15 calendar days
169 from the day on which this notice was mailed, you are required to pay within 30 calendar days
170 from the day on which this notice is mailed:
171 (1) the check amount;
172 (2) the $20 service charge; and
173 (3) collection costs not to exceed $20.
174 If you do not pay the check amount, the $20 service charge, and the collection costs
175 within 30 calendar days from the day on which this notice is mailed, in accordance with
176 Section 7-15-1, Utah Code Annotated, an appropriate civil legal action may be [
177 commenced against you for:
178 (1) the check amount;
179 (2) interest;
180 (3) court costs;
181 (4) attorneys' fees;
182 (5) actual costs of collection as provided by law; and
183 (6) damages in an amount equal to the greater of $100 or triple the check amount,
184 except:
185 (a) that damages recovered under this Subsection (6) may not exceed the check amount
186 by more than $500; and
187 (b) you are not liable for these damages for a check used to obtain a deferred deposit
188 loan.
189 In addition, the criminal code provides in Section 76-6-505, Utah Code Annotated, that
190 any person who issues or passes a check for the payment of money, for the purpose of
191 obtaining from any person, firm, partnership, or corporation, any money, property, or other
192 thing of value or paying for any services, wages, salary, labor, or rent, knowing it will not be
193 paid by the drawee and payment is refused by the drawee, is guilty of issuing a bad check.
194 The civil action referred to in this notice does not preclude the right to prosecute under
195 the criminal code of the state.
196 (Signed) ____________________________________________________
197 Name of Holder: ____________________________________________________
198 Address of Holder: ____________________________________________________
199 Telephone Number: ___________________________________________________"
200 (3) Notwithstanding the other provisions of this section, a holder exempt under
201 Subsection 7-15-1(9) is exempt from this section.
Legislative Review Note
Office of Legislative Research and General Counsel