1     
BAD CHECK FEE AMENDMENTS

2     
2019 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Ken Ivory

5     
Senate Sponsor: Wayne A. Harper

6     

7     LONG TITLE
8     General Description:
9          This bill amends provisions related to dishonored checks.
10     Highlighted Provisions:
11          This bill:
12          ▸     increases the amount of collection costs for which the issuer of a dishonored check
13     is liable; and
14          ▸     makes technical and conforming changes.
15     Money Appropriated in this Bill:
16          None
17     Other Special Clauses:
18          None
19     Utah Code Sections Affected:
20     AMENDS:
21          7-15-1, as last amended by Laws of Utah 2017, Chapter 198
22          7-15-2, as last amended by Laws of Utah 2017, Chapter 198
23     

24     Be it enacted by the Legislature of the state of Utah:
25          Section 1. Section 7-15-1 is amended to read:
26          7-15-1. Definitions -- Civil liability of issuer -- Notice of action -- Collection costs
27     -- Exemptions.

28          (1) As used in this chapter:
29          (a) "Check" means a payment instrument on a depository institution including a:
30          (i) check;
31          (ii) draft;
32          (iii) order; or
33          (iv) other instrument.
34          (b) "Issuer" means a person who makes, draws, signs, or issues a check, whether as
35     corporate agent or otherwise, for the purpose of:
36          (i) obtaining from any person any money, merchandise, property, or other thing of
37     value; or
38          (ii) paying for any service, wages, salary, or rent.
39          (c) "Mailed" means the day that a notice is properly deposited in the United States
40     mail.
41          (2) (a) An issuer of a check is liable to the holder of the check if:
42          (i) the check:
43          (A) is not honored upon presentment; and
44          (B) is marked "refer to maker";
45          (ii) the account upon which the check is made or drawn:
46          (A) does not exist;
47          (B) has been closed; or
48          (C) does not have sufficient funds or sufficient credit for payment in full of the check;
49     or
50          (iii) (A) the check is issued in partial or complete fulfillment of a valid and legally
51     binding obligation; and
52          (B) the issuer stops payment on the check with the intent to:
53          (I) fraudulently defeat a possessory lien; or
54          (II) otherwise defraud the holder of the check.
55          (b) If an issuer of a check is liable under Subsection (2)(a), the issuer is liable for:
56          (i) the check amount; and
57          (ii) a service charge of $20.
58          (3) (a) The holder of a check that has been dishonored may:

59          (i) give written or oral notice of dishonor to the issuer of the check; and
60          (ii) waive all or part of the service charge imposed under Subsection (2)(b).
61          (b) Notwithstanding Subsection (2)(b), a holder of a check that has been dishonored
62     may not collect and the issuer is not liable for the service charge imposed under Subsection
63     (2)(b) if:
64          (i) the holder redeposits the check; and
65          (ii) that check is honored.
66          (4) If the issuer does not pay the amount owed under Subsection (2)(b) within 15
67     calendar days from the day on which the notice required under Subsection (5) is mailed, the
68     issuer is liable for:
69          (a) the amount owed under Subsection (2)(b); and
70          (b) collection costs not to exceed [$20] $35.
71          (5) (a) A holder shall provide written notice to an issuer before:
72          (i) charging collection costs under Subsection (4) in addition to the amount owed under
73     Subsection (2)(b); or
74          (ii) commencing an action based upon this section.
75          (b) The written notice required under Subsection (5)(a) shall notify the issuer of the
76     dishonored check that:
77          (i) if the amount owed under Subsection (2)(b) is not paid within 15 calendar days
78     from the day on which the notice is mailed, the issuer is liable for:
79          (A) the amount owed under Subsection (2)(b); and
80          (B) collection costs under Subsection (4); and
81          (ii) the holder may commence a civil action if the issuer does not pay to the holder the
82     amount owed under Subsection (4) within 30 calendar days from the day on which the notice is
83     mailed.
84          (6) (a) Except as provided in Section 7-23-401, if the issuer has not paid the holder the
85     amounts owed under Subsection (4) within 30 calendar days from the day on which the notice
86     required by Subsection (5) is mailed, the holder may offer to not commence a civil action under
87     this section if the issuer pays the holder:
88          (i) the amount owed under Subsection (2)(b);
89          (ii) the collection costs under Subsection (4);

90          (iii) an amount that:
91          (A) is equal to the greater of:
92          (I) $50; or
93          (II) triple the check amount; and
94          (B) does not exceed the check amount plus $250; and
95          (iv) if the holder retains an attorney to recover on the dishonored check, reasonable
96     attorney's fees not to exceed $50.
97          (b) (i) Notwithstanding Subsection (6)(a), all amounts charged or collected under
98     Subsection (6)(a)(iii) shall be paid to and be the property of the original payee of the check.
99          (ii) A person who is not the original payee may not retain any amounts charged or
100     collected under Subsection (6)(a)(iii).
101          (iii) The original payee of a check may not contract for a person to retain any amounts
102     charged or collected under Subsection (6)(a)(iii).
103          (7) (a) A holder may not commence a civil action under this section unless the issuer
104     fails to pay the amounts owed:
105          (i) under Subsection (4); and
106          (ii) within 30 calendar days from the day on which the notice required by Subsection
107     (5) is mailed.
108          (b) Subject to Subsections (7)(c) and (d) and except as provided in Section 7-23-401,
109     in a civil action the issuer of the check is liable to the holder for:
110          (i) the amount owed under Subsection (2)(b);
111          (ii) the collection costs under Subsection (4);
112          (iii) interest;
113          (iv) court costs;
114          (v) reasonable attorney fees; and
115          (vi) damages:
116          (A) equal to the greater of:
117          (I) $100; or
118          (II) triple the check amount; and
119          (B) not to exceed the check amount plus $500.
120          (c) If an issuer is held liable under Subsection (7)(b), notwithstanding Subsection

121     (7)(b), a court may waive any amount owed under Subsections (7)(b)(iii) through (vi) upon a
122     finding of good cause.
123          (d) If a holder of a check violates this section by commencing a civil action under this
124     section before 31 calendar days from the day on which the notice required by Subsection (5) is
125     mailed, an issuer may not be held liable for an amount in excess of the check 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] $35.
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 commenced
177     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.