Business collection agencies – Threats of Criminal Prosecution. Does the borrower’s “bad check” in a quick payday loan represent a criminal activity?

You’ve got asked four questions regarding the connection of unlawful bad check rules towards the defined deposit financing company, commonly called “payday loans,” or “check always loans.”

Together with your inquiry, you forwarded two collection letters utilized by payday loan providers together with NSF checks which invoke the specter of criminal prosecution as a result of non-payment of a check loan. (Copies are appended as Attachment the, aided by the identification of this loan providers redacted.)


The concerns arise being an outgrowth of a three year statute that is old legalized the business enterprise of using “cool” checks for defined deposit in return for a cost, as a method of earning little loans.

Since would be talked about in more detail below, these deals are short-term, small-sum loans that are the main topic of a unique usury statute enabling excessively high rates of interest. As the check itself acts a twin function in these “check loans” or “payday loans” — both as an alternative when it comes to promissory note/credit contract/security contract — and, simultaneously, as a technique of repaying your debt at another time, any standard on these loans will fundamentally include a bounced check. 1

Does the borrower’s check that is“bad in a quick payday loan represent a criminal activity?