A customer's check bounced — what should I do?
Customer's check bounced: your rights, the fees you can charge, and what to do next
Short answer
Notify the customer immediately by phone or email, state the returned-check fee your agreement allows, and re-present the check once if your bank allows it — re-presentation succeeds in about 30–40% of NSF cases. If the second attempt fails or you do not re-present, send a formal bad-check demand letter by certified mail stating the statutory NSF fee for your state plus the original amount. In most states, failure to pay after written demand triggers civil and potentially criminal bad-check remedies. Give them 10–30 days depending on state law before filing.
A returned check (NSF — non-sufficient funds — or account closed) is both a payment failure and a triggering event for additional legal remedies in most states. The sequence matters: how quickly you act determines which options remain available.
Step one: contact the customer within 24–48 hours. Most returned checks are NSF, not fraud — the customer's account ran short and the timing was bad. A quick call resolves the majority of cases with a replacement payment method (credit card, ACH, wire) within a day or two. Do not assume bad faith on the first return.
Step two: charge your returned-check fee if your contract or invoice allows it. Most service agreements include a returned-check fee clause of $25–$50 or the statutory maximum for your state. Even if you do not have a clause, you can add the fee to the revised invoice — though contractual authority makes collection cleaner. Keep the fee reasonable and consistent with your state's commercial limits.
Step three: re-presentment. Banks allow most checks to be re-presented once after an NSF return. Some businesses do this automatically; others wait for confirmation from the customer. Re-presentment succeeds roughly 30–40% of the time. If it clears, you are done; if it fails again, move to the demand-letter step.
Step four: the bad-check demand letter. Every US state has a bad-check statute that allows you to send a formal written demand for the face amount of the check plus statutory damages (typically $25–$50 or the statutory NSF fee, sometimes treble damages up to a cap) plus attorney fees in some states. The demand must be sent by certified mail and typically gives the payer 10–30 days to respond, depending on the state. After that window, civil small-claims filing or criminal bad-check referral becomes available in most jurisdictions. The bad-check statutes were designed for exactly this situation.
Document everything: the returned-item notice from your bank, the date of customer notification, the demand letter with certified mail receipt, and any communication from the customer. This paper trail is your evidence for small claims, a collection agency, or a police report if the situation escalates to fraud.