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Bad Check Service Fees, are They Important?


As noted in the last Green Sheet, the debate over Bad Check Services fees in California is just beginning to heat up.

When the case which has caused all the concern, (Debbie Newman, et all Vs CheckRite California, Inc. et al, case # 93 Civil 1557) finally goes to trial the determination regarding Service Fees in California, will finally create a level playing field concerning this issue.

This pending case will determine if it is lawful to charge a consumer a service fee, in the absence of a court granting such a specific charge, and in particular, within the first 30 days.

While such a charge is very common, merchants have as much to lose as do Collection, Verification or Guarantee companies, should the Federal case determine that Service Fees are unlawful. As an example the front page has the specific effect of Service Fees on the economics of Bad Checks in the Grocery industry.

While this is representative of many low ticket environments, the California case could also have impact on other states, and create an even more burdensome environment in the East with their high bank return fees, which could end up not being able to be recovered from the consumer.

Finally, to our knowledge, the Check Guarantee company CrossCheck Inc., remains the only Check Guarantee company reimbursing Return Check Fees, and with the current climate of uncertainty, should make this feature more and more attractive to retailers.

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