Returned Non-Sufficient-Funds Checks

Every PTA must establish procedures for non-sufficient-funds (NSF) checks. At a minimum, PTAs should require that the payee is liable for whatever fee the bank has charged for the transaction. These procedures should be documented in the standing rules.

Tips for handling checks received by the PTA in payment for goods or services and returned from the bank for non-sufficient-funds:

  • Call the writer of the check, explain that the check was returned by the bank and provide the reason given by the bank. Remember to state that the writer is now liable for whatever fee the bank has charged for the transaction. Document all conversations, including unsuccessful attempts to contact the check writer.
  • If the unit has not received payment within 10 days, contact the check writer again to discuss the matter.
  • Thirty days from the initial contact, if payment still has not been received, send the writer of the check a certified letter:
    • State in full why the money is owed to the PTA.
    • Demand payment in cash or bank issued money order plus the bank fee. Do not accept another check. (For cash, issue a written receipt to the payer, signed by two individuals.)
    • State in the letter that according to California Civil Code § 1719, if the unit files with the Small Claims Court, it will sue for the amount of the check plus three times that amount in damages.
    • Keep a copy of the letter for the files.

There are some exceptions to the “check plus three times” rule, but the law states that if one follows these rules, one shall receive the triple damages. The judge has no discretion in this matter.

The decision to pursue a money matter in the courts should be decided by a vote of the PTA executive board. If the unit or council is incorporated, check the Articles of Incorporation to determine who should be involved in making such a decision. Remember, this is a confidential matter and should not be discussed outside the executive board meeting.

The court may require that the PTA provide a copy of a motion authorizing the filing of the claim and the individual authorized to represent the association.

For proper direction, rules, and procedures for filing in Small Claims Court, check with the clerk of the municipal court in the unit’s area. It may be necessary to provide the court clerk with a copy of the minutes that include the motion (resolution) designating certain officers to act for the association in court.

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