When a check is returned for nonsufficient funds (NSF), state laws, which vary by state, govern the civil and criminal penalties that may be imposed. The guilty party is usually the person who wrote the check, but it could also be the person who fraudulently passed it on, or even a third party who endorsed and passed the check on to another. Civil penalties may include dollar limits on the amount of NSF charges the bank may impose, such as attorney fees, court costs, service costs, collection costs, and processing charges.
State criminal laws define whether the writing of a bad check is a misdemeanor or felony and set forth the maximum penalties, which include fines and/or jail time, which may be imposed. State laws also define any notice requirements which must be met by the bank before penalties may be imposed.
