1.1                          A bill for an act 
  1.2             relating to commerce; amending provisions relating to 
  1.3             charges recipients of dishonored checks may collect 
  1.4             from persons who write the checks; amending Minnesota 
  1.5             Statutes 2000, section 332.50. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2000, section 332.50, is 
  1.8   amended to read: 
  1.9      332.50 [CIVIL LIABILITY FOR ISSUANCE OF WORTHLESS CHECK.] 
  1.10     Subdivision 1.  [DEFINITIONS.] (a) The definitions provided 
  1.11  in this subdivision apply to this section. 
  1.12     (b) "Check" means a check, draft, order of withdrawal, or 
  1.13  similar negotiable or nonnegotiable instrument.  
  1.14     (c) "Credit" means an arrangement or understanding with the 
  1.15  drawee for the payment of the check. 
  1.16     (d) "Dishonor" has the meaning given in section 336.3-502, 
  1.17  but does not include dishonor due to a stop payment order 
  1.18  requested by an issuer who has a good faith defense to payment 
  1.19  on the check.  "Dishonor" does include a stop payment order 
  1.20  requested by an issuer if the account did not have sufficient 
  1.21  funds for payment of the check at the time of presentment, 
  1.22  except for stop payment orders on a check found to be stolen.  
  1.23     (e) "Payee" or "holder" includes an agent of the payee or 
  1.24  holder. 
  1.25     Subd. 2.  [ACTS CONSTITUTING.] Whoever issues any check 
  2.1   that is dishonored is liable for the following penalties charges:
  2.2      (a) A service charge of up to $20, or actual costs of 
  2.3   collection not to exceed $30, may be imposed immediately on any 
  2.4   dishonored check by the payee or holder of the check, regardless 
  2.5   of mailing a notice of dishonor, if notice of the service charge 
  2.6   was conspicuously displayed on the premises when the check was 
  2.7   issued.  If a law enforcement agency obtains payment of a 
  2.8   dishonored check, a service charge not to exceed $25 may be 
  2.9   imposed if the service charge is retained by the law enforcement 
  2.10  agency for its expenses.  Only one service charge may be imposed 
  2.11  under this paragraph for each dishonored check.  The displayed 
  2.12  notice must also include a provision notifying the issuer of the 
  2.13  check that additional charges may be imposed for nonpayment. 
  2.14     (b) The payee or holder of a dishonored check may impose 
  2.15  additional charges as described in this subdivision against the 
  2.16  issuer of a dishonored check if the payee or holder mails the 
  2.17  issuer a notice of dishonor, notifying the issuer that the face 
  2.18  value of the check and the service charge must be paid within 33 
  2.19  days after the date of mailing.  If the issuer fails to remit 
  2.20  payment of the check amount and the $30 service charge within 33 
  2.21  days after the date of the mailing of the notice, the payee or 
  2.22  holder must, if the payee or holder wishes to assess the 
  2.23  additional charges permitted by this subdivision, send a second 
  2.24  notice, entitled notice of failure to pay.  That notice must 
  2.25  inform the issuer that the payee or holder has not received the 
  2.26  payment of the original face amount of the dishonored check and 
  2.27  the $30 service charge as demanded in the notice of dishonor.  
  2.28  The notice of failure to pay must inform the issuer that failure 
  2.29  to remit payment as demanded within ten days of the mailing of 
  2.30  the notice of failure to pay will permit the payee or holder to 
  2.31  immediately impose an additional charge of $75 or the face value 
  2.32  of the check, whichever is greater; interest charges from the 
  2.33  date of dishonor; and, under some circumstances, reasonable 
  2.34  attorney fees.  If the amount of the dishonored check is and the 
  2.35  service charge of $30 are not paid within 30 ten days after the 
  2.36  payee or holder has mailed notice of dishonor pursuant to 
  3.1   section 609.535 and a description of the penalties contained in 
  3.2   this subdivision the notice of failure to pay, whoever issued 
  3.3   the dishonored check is liable to the payee or holder of the 
  3.4   check for: 
  3.5      (1) the amount of the check, the service charge as provided 
  3.6   in paragraph (a), plus a civil penalty of up to $100 and an 
  3.7   additional charge of $75 or the value of the check, whichever is 
  3.8   greater.  The civil penalty may not be imposed until 30 days 
  3.9   following the mailing of the notice of dishonor.  A payee or 
  3.10  holder of the check may make a written demand for payment of the 
  3.11  civil liability by sending a copy of this section and a 
  3.12  description of the liability contained in this section to the 
  3.13  issuer's last known address.  Notice as provided in paragraph 
  3.14  (a) must also include notification that additional civil 
  3.15  penalties will be imposed for dishonored checks for nonpayment 
  3.16  after 30 days; 
  3.17     (2) interest at the rate payable on judgments pursuant to 
  3.18  section 549.09 on the face amount of the check from the date of 
  3.19  dishonor; and 
  3.20     (3) reasonable attorney fees if the aggregate amount of 
  3.21  dishonored checks issued by the issuer to all payees within a 
  3.22  six-month period is over $1,250. 
  3.23     (c) This subdivision prevails over any provision of law 
  3.24  limiting, prohibiting, or otherwise regulating service charges 
  3.25  authorized by this subdivision, but does not nullify charges for 
  3.26  dishonored checks, which do not exceed the charges in paragraph 
  3.27  (a) or terms or conditions for imposing the charges which have 
  3.28  been agreed to by the parties in an express contract. 
  3.29     (d) A sight draft may not be used as a means of collecting 
  3.30  the civil penalties provided in this section additional charges 
  3.31  of $75 or the face value of the check without prior consent of 
  3.32  the issuer. 
  3.33     (e) The issuer of a dishonored check is not liable for the 
  3.34  penalties described charges permitted in paragraph (b), clauses 
  3.35  (1), (2), and (3), if a pretrial diversion program under section 
  3.36  628.69 has been established in the jurisdiction where the 
  4.1   dishonored check was issued, the issuer was accepted into the 
  4.2   program, and the issuer successfully completes the program. 
  4.3      (f) If the issuer's account had insufficient funds because 
  4.4   a check deposited by the issuer in good faith was dishonored, 
  4.5   the issuer can submit an affidavit to the payee or holder to 
  4.6   extend the time permitted to pay the dishonored check and the 
  4.7   service charge before the additional charge in paragraph (b) 
  4.8   will be imposed.  The affidavit must be sent to the payee or 
  4.9   holder within 33 days of the postmark date of the notice of 
  4.10  dishonor.  The affidavit must state that under penalty of 
  4.11  perjury the sole reason that there were insufficient funds in 
  4.12  the issuer's account was because: 
  4.13     (1) a check deposited in good faith in the account was 
  4.14  dishonored on or before the time the issuer's dishonored check 
  4.15  was presented for payment; and 
  4.16     (2) at the time the dishonored check was written, the 
  4.17  issuer did not have notice that the check deposited in the 
  4.18  account was dishonored. 
  4.19     The issuer must also provide the payee or holder with proof 
  4.20  of the name of the person or entity who issued the dishonored 
  4.21  check, the date the check was deposited, the date it was 
  4.22  dishonored, and the check amount. 
  4.23     The payee or holder shall then give the issuer an 
  4.24  additional 30 days beyond the initial 30 days given in the 
  4.25  notice of dishonor to submit full payment for value of the check 
  4.26  and the service charge before the additional charge in paragraph 
  4.27  (b) will be imposed.  If after the additional 30 days, the 
  4.28  issuer fails to submit full payment for the check and service 
  4.29  charge, the payee or holder shall send the notice of failure to 
  4.30  pay, giving the issuer ten additional days before the issuer 
  4.31  shall be liable for the additional charge of $75 per dishonored 
  4.32  check or the value of the check, whichever is greater. 
  4.33     Subd. 3.  [NOTICE OF DISHONOR REQUIRED MAILING AND FORM OF 
  4.34  NOTICE REQUIREMENTS FOR NOTICE OF DISHONOR AND NOTICE OF FAILURE 
  4.35  TO PAY.] (a) Notice of nonpayment or dishonor and notice of 
  4.36  failure to pay that includes include a citation to this section 
  5.1   and section 609.535, and a description of the penalties 
  5.2   contained in these sections, shall be sent by the payee or 
  5.3   holder of the check to the drawer by certified mail, return 
  5.4   receipt requested, or by regular mail, supported by an affidavit 
  5.5   of service by mailing, to the address printed or written on the 
  5.6   check. shall be substantially in the form provided in paragraphs 
  5.7   (d) and (e), respectively.  The notices shall be mailed by the 
  5.8   payee or holder of the check to the issuer by certified mail, 
  5.9   return receipt requested, or by regular mail, supported by proof 
  5.10  of mailing, to the address printed or written on the check, or 
  5.11  to the issuer's last known address.  The proof of mailing shall 
  5.12  be prepared and provided, at no charge, to the issuer of the 
  5.13  dishonored check upon written request by the issuer to the 
  5.14  sender of the notice. 
  5.15     (b) The issuance of a check with an address printed or 
  5.16  written on it is a representation by the drawer issuer that the 
  5.17  address is the correct address for receipt of mail concerning 
  5.18  the check.  Failure of the drawer issuer to receive a regular or 
  5.19  certified mail notice sent to that address is not a defense to 
  5.20  liability under this section, if the drawer issuer has had 
  5.21  actual notice for 30 days that the check has been dishonored.  
  5.22     An affidavit of service by Proof of mailing shall be 
  5.23  retained by the payee or holder of the check.  
  5.24     (c) All forms must be clearly legible and printed in not 
  5.25  less than the equivalent of ten-point type.  A form that uses 
  5.26  both sides of a sheet must clearly indicate on the front side 
  5.27  that there is additional information on the back side of the 
  5.28  sheet. 
  5.29     (d) The notice of dishonor must be in substantially the 
  5.30  following form and mailed as required in this section. 
  5.31                           First Notice 
  5.32                    Notice of Dishonored Check 
  5.33  Date:            ......................
  5.34  Name of issuer:  ......................
  5.35  Street Address:  ......................
  5.36  City and State:  ......................
  6.1   Total Now Due:   $..................... 
  6.2      You are, according to law, hereby notified that the checks 
  6.3   listed below have been dishonored and returned unpaid by your 
  6.4   financial institution.  Under Minnesota law, unless the checks 
  6.5   are paid in full within five business days after mailing of this 
  6.6   notice, the payee or holder of the checks may refer the matter 
  6.7   to proper authorities for prosecution under Minnesota Statutes, 
  6.8   section 609.535, subdivision 3. 
  6.9      A service charge of $30 per check has been imposed under 
  6.10  Minnesota Statutes, section 332.50.  If the dishonored checks 
  6.11  plus the service charges are not paid within 33 days after the 
  6.12  mailing of this notice, the payee or holder of the check may 
  6.13  send you a notice of failure to pay notifying you that you will 
  6.14  be liable to pay an additional service charge in the amount of 
  6.15  $75 per check or the face value of the check, whichever is 
  6.16  greater.  The additional charges will be imposed if payment of 
  6.17  the face amount of the checks plus the service charges are not 
  6.18  paid within ten days of the mailing of the notice of failure to 
  6.19  pay. 
  6.20  Check No.   Check Date   Payee   Check Amt.   Service Chg. 
  6.21  .............................................................. 
  6.23     Payment is to be sent to the following name and address: 
  6.24  Payee or Holder: ...............................
  6.25  Mailing Address: ...............................
  6.26                   ...............................
  6.27                   ...............................
  6.28  Telephone Number: (   ) ........
  6.29     If your account had insufficient funds because a check 
  6.30  deposited in your account was dishonored, you can submit an 
  6.31  affidavit to the payee or holder to extend the time permitted to 
  6.32  pay the dishonored check and the service charge by an additional 
  6.33  30 days beyond the initial 33 days given in the notice of 
  6.34  dishonor before the additional charge of $75 or the value of the 
  6.35  check, whichever is greater, will be imposed.  You must send the 
  6.36  affidavit within 33 days of the postmark date of the notice of 
  7.1   dishonor.  The affidavit must state under penalty of perjury 
  7.2   that: 
  7.3      (1) the sole reason your account had insufficient funds was 
  7.4   because a check deposited in good faith in your account was 
  7.5   dishonored on or before the time you wrote the dishonored check; 
  7.6   and 
  7.7      (2) at the time you wrote the dishonored check, you did not 
  7.8   have notice that the check deposited in your account was 
  7.9   dishonored. 
  7.10     You must also provide the payee or holder with proof of the 
  7.11  name of the person or entity who issued you the dishonored 
  7.12  check, the date that check was deposited in your account, and 
  7.13  the amount of that check. 
  7.14     (e) The notice of failure to pay must be in substantially 
  7.15  the following form and mailed as required in this section. 
  7.16                          Second Notice 
  7.17                     Notice of Failure to Pay 
  7.18  Date:            ......................
  7.19  Name of Issuer:  ......................
  7.20  Street Address:  ......................
  7.21  City and State:  ......................
  7.23  Total Now Due:  $......................
  7.25  Total Due After Ten Days:   $..........
  7.26     You are, according to law, hereby notified that the checks 
  7.27  and service charges listed below continue to remain unpaid.  
  7.28  Under Minnesota Statutes, section 332.50, unless the checks and 
  7.29  service charge of $30 per check are paid in full within ten days 
  7.30  after mailing of this second notice, the payee or holder of the 
  7.31  checks will assess an additional service charge of $75 for each 
  7.32  dishonored check or the value of the check, whichever is 
  7.33  greater, and/or may refer the matter to proper authorities for 
  7.34  prosecution under Minnesota Statutes, section 609.535, 
  7.35  subdivision 3. 
  7.36  Check No.   Check Date   Payee   Check Amt.   Service Chg.
  8.1   ..........................................................
  8.3      Payment is to be sent to the following name and address: 
  8.4   Payee or Holder:  ....................................
  8.5   Mailing Address:  ....................................
  8.6                     ....................................
  8.7                     ....................................
  8.8   Telephone Number: (   )..........
  8.9      Subd. 4.  [PROOF OF IDENTITY.] The check is prima facie 
  8.10  evidence of the identity of the drawer issuer if the person 
  8.11  receiving the check:  
  8.12     (a) records the following information about the drawer 
  8.13  issuer on the check, unless it is printed on the face of the 
  8.14  check:  
  8.15     (1) name; 
  8.16     (2) home or work address; 
  8.17     (3) home or work telephone number; and 
  8.18     (4) identification number issued pursuant to section 
  8.19  171.07; 
  8.20     (b) compares the drawer's issuer's physical appearance, 
  8.21  signature, and the personal information recorded on the check 
  8.22  with the drawer's issuer's identification card issued pursuant 
  8.23  to section 171.07; and 
  8.24     (c) initials the check to indicate compliance with these 
  8.25  requirements.  
  8.26     Subd. 5.  [DEFENSES.] Any defense otherwise available to 
  8.27  the drawer issuer also applies to liability under this section. 
  8.28     Sec. 2.  [EFFECTIVE DATE.] 
  8.29     Section 1 is effective August 1, 2001, and applies to 
  8.30  checks issued on or after that date.