SW Legal Educational Publishing

FDCPA Applies to Bounced Checks
Description Appeals court held that a dishonored check creates a debt that triggers application of the Fair Debt Collection Practices Act. Under the Act, consumers must be given notice of their rights that apply when debt collection is attempted.
Topic Consumer Protection
Key Words Fair Debt Collection Practices Act; Dishonored Check; Validation Notice
C A S E   S U M M A R Y
Facts On 10/23/94, Snow wrote a check in the amount of $23.12 to Circle-K (a convenience store) for goods he bought. The check bounced. Circle-K sent the check to its attorney, Riddle, who sent Snow a letter on 5/10/96 demanding payment, plus a $15 service fee, within seven days or suit would be filed. Snow paid the $23.12 but refused to pay the $15. He sued Riddle for violating the Fair Debt Collection Practices Act by not including a "validation notice" alerting him to his legal rights under the FDCPA. Snow demanded damages for emotional distress and also asked for statutory damages of $1,000 as provided for in the Act. Riddle asked the district court to dismiss the suit because it does not apply to dishonored checks. The judge agreed; Snow appealed.
Decision Reversed. A payment obligation arising from a dishonored check creates a debt that triggers the protections of the Act. A debt "is created where one obtain goods and gives a dishonored check in return therefor." Several circuit courts have also held the Act to apply in such instances.
Citation Snow v. Riddle, 143 F.3d 1350 (10th Cir., 1998)

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