Bad checks are checks that are rejected due to lack of funds or other reasons upon presentation. Bad checks cause a great deal of loss to businesses, banks, and companies. Sometimes, bad checks may be written deliberately with the intention of cheating someone out of money. However, most of the time, bad checks are written due to genuine mistakes made by people, computers, and banks.
A bad check is basically a check written for an amount that is more than the amount present in the account. A check written for a closed account is also a bad check. Giving a stop payment for a check after getting the services for which the check was issued is also a type of bad check.
Sometimes, issuing of checks unaware of the amount actually in the account causes bad checks. The consequences of issuing a bad check can be repaired by paying the amount stated in the check, and also the service fees for the processing of the check.
There have been considerable losses to merchants and businesses due to bad checks. Issuing a bad check can lead to criminal proceedings against the person who issues the check. When a merchant receives a bad check, he can lodge a complaint against the person who issued the check. The liability to restitution of a bad check is with the issuer. Evading the restitution allows the law to begin proceedings against the issuer.
There are many ways to avoid writing bad checks as well as to avoid being the victim of a bad check.
Writing and signing the check before you issue it, checking whether the number in figures is same as that of the numbers in words, checking the date of the check and thus avoiding post dated checks, obtaining the correct full address and phone number of the issuer , obtaining a valid proof of identification, not accepting checks you suspect to be bad, and calling the bank in order to validate the account and checking to see if the amount on the check is larger than what is in the account are some of the ways to avoid being issued a bad check.