lawsuit has been filed in federal court over the electronic collection of fees from consumers' checking accounts when those checks are returned for non-sufficient funds (NSF).

The defendants are a group of companies including CheckAGAIN, LLC of Herndon, Va., that the plaintiffs say electronically re-present checks returned for NSF and then without knowledge or permission from the check writer, collect the service charge penalties on behalf of merchants to whom the checks were written.

At issue is the notice merchants provide consumers regarding authorization to deduct those fees from their accounts electronically. Cal Mayo, of the firm Mayo Mallette, PLLC, of Oxford, Miss., is the attorney representing plaintiffs in the case. The suit asserts that consumers are often not aware that the fees will be collected.

As basis for the suit, Mayo cited violations of the federal Fair Debt Collection Practices Act, NACHA rules and state statutes that provide clear-cut procedures for recovering funds from bad checks and related service charges.

Advances in technology have changed the way checks are processed and funds are collected, he said, and may be part of the reason consumers are unclear of the practices involved.

A CheckAGAIN spokesperson said it makes a stamp available to merchants to imprint the back of checks they receive from customers. The stamp includes information about the collection of service fees and customers are asked to initial or sign it, indicating their acknowledgement of the process.

"CheckAGAIN is aware of the lawsuit issued in Mississippi, and we are confident that it will be found that CheckAGAIN is in full compliance with all federal rules and regulations," the company said.

The suit was filed in Hattiesburg, Miss. in September 2003. This case is significant because no state or federal courts have previously ruled on points involved. Mayo said the case is currently not classified as a class action; however, he said it could affect "hundreds of thousands, potentially millions of plaintiffs. It's important because the practice is horrible. Consumers are having money stolen out of their accounts."