It isn't an uncommon thing to accidentally bounce a check. For most people, it's an expensive annoyance, but there's rarely any bigger penalty attached than a few "insufficient funds" fees debiting their account. However, if you happened to write the bad check to a payday loan company, a single bad check can put you at risk of a federal bank fraud charge and 30 years in prison. This is what you should know.
How does it happen?
The basic definition of check fraud is writing a check that isn't backed up by the sufficient cash. While there are some elaborate ways of purposefully doing this, there are some fairly simple ways that it can happen as well:
- writing a check on an account that is closed
- writing a check to a business for more than you have in your account, because you think that you'll receive enough money to cover it by the time the check clears
- depositing a check from someone else into your bank account and then drawing on the funds before you find out that the check wasn't valid
All of these things can happen very easily if you're already in debt and have resorted to the short-term lenders offering high-interest rate cash advances on your next paycheck. Even though it isn't supposed to be a crime to be unable to pay your debts, payday lenders in some states, like Texas, have seen results by pressing criminal charges against people who fail to meet their loan obligations. This encourages many others to threaten debtors with similar criminal charges.
Have you really done anything illegal?
In order to be guilty of check fraud, you had to write the check knowing that you couldn't cover it and never intending to cover it. However, payday loan companies operate under a business model that has, as its sole purpose, to loan money to people who don't have the sufficient funds to meet their immediate expenses. They knew that you didn't have the money in your account when you wrote the check.
The real question is whether or not it can be proven that you knew when you wrote the check that you weren't ever going to honor the debt.
For example, if the bank closed your account because you had several overdrafts or overdrafts and bank fees ate up your next paycheck before the payday loan company could redeem your check, that wasn't an intentional fraud on your part. If the company you worked for suddenly went under and failed to honor your last paycheck, there was no way for you to avoid defaulting on your loan. If you were suddenly fired, your last pay not have been enough to cover the check you wrote the payday lender. Those sorts of things happen every day, but they're the sort of issue that should be dealt with in civil court, not criminal court.
Because allegations of check fraud are serious things, don't assume that a lender that's threatening you with criminal action is just trying to frighten you. Contact a criminal defense attorney to discuss the situation and see what can be done to protect you from trouble.