Treble Damages for "Bad Checks"
If your business receives a "bad check" from a customer, there may be a solution you haven't considered. Under Ohio law, in certain circumstances you may be entitled to "treble damages" equal to three times the amount of the check, plus your attorneys' fees.
Here is the way it works. Under Ohio Rev. Code §2913.01 and §2913.11, if someone gives you a check and there is not enough money in the account to pay the check, a criminal theft offense has been committed. Ohio Rev. Code §2307.60 allows a person injured by a criminal act such as a theft offense to bring a civil action to recover damages, plus attorneys' fees. Ohio Rev. Code §2307.61 speaks to the amount of those damages.
Pursuant to Ohio Rev. Code §2307.61, the recipient of a bad check is entitled to receive, at its choice, either compensatory or liquidated damages. Compensatory damages are awarded as follows:
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$50 if the loss was $50 or less
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$100 if the loss was more than $50 but no more than $100
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$150 if the loss was more than $100
Liquidated damages is the greater of either $200 or three (3) times the amount of the check, plus any charges imposed by the recipient's financial institution as a result of there being insufficient funds in the issuer's account, "irrespective of whether the property is recovered by way of replevin or otherwise, is destroyed or otherwise damaged, is modified or otherwise altered, or is resalable at its full market price." In plain English this means that you can get treble damages (i.e. three times the amount of the check) even if you get the goods back that the "bad check" was used to purchase.
If the original amount involved is less than $5000, the recipient of the bad check can also recover "reasonable administrative expenses" if a written demand for payment of the treble damages is made by certified mail, receipt requested, in accordance with the requirements set out in the statute. Ohio Rev. Code §2307.61(A)(2). "Administrative expenses" includes "the costs of written demands for payment and associated postage." Ohio Rev. Code §2307.61(H)(1). The notice must be sent at least thirty days prior to filing any lawsuit.
While the statute does not seem to require it, caselaw has imposed the same notice requirement on parties seeking treble damages because not requiring it "would defeat the public policy of encouraging parties to settle their disputes outside the judicial system." Buckeye Check Cashing Inc. v. Proctor, 199 Ohio App. LEXIS 2678 (Franklin County)
Thus, the key thing to remember is that a notice must be given the perpetrator who issued the check at least thrity days before initiating a lawsuit. To be efective, that notice must contain certain specific information pursuant to §2307.61(C):
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The specific property damage or theft offense committed
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The amount of damages for which recovery is sought
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Notice that if payment of the specified demand amount is made within thirty days thereafter or an agreement for payment is made within that time and kept, no lawsuit will be filed
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Notice that if either payment of the damages demand is not made within thirty days or there is a default on any agreement made within that thirty days, a lawsuit may be filed
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The fact that any recovery in the lawsuit may also include attorneys' fees, reasonable administrative costs, court costs, and any compensatory damages provable
To be sure you have sent an effective notice, be sure to read the satute carefully or consult an attorney before sending it out. In addition, sending the notice by both regular and certified mail is a good idea.
