Estimated reading time (in minutes)
Warning obligation: liability of the bank for NSF checks
In banking, recent events in 2013 highlight the important role played by the bank in the payment of checks for insufficient funds. The bank cannot refuse a payment solely for insufficient funds without informing the account holder of the consequences. A recent ruling by the Commercial Chamber of the Court of Cassation reaffirms this warning obligation, emphasizing that the bank’s notification must be sent before the check is rejected (Court of Cassation, Commercial Chamber, February 7, 2012, No. 10- 27078). The move reinforces the bank’s responsibility in handling bounced (NSF) checks, particularly in cases involving merchants.
Collection procedure: processing unpaid checks
When a bank informs that a deposited check is returned unpaid for insufficient funds, a specific procedure is put in place to recover the amount due. Initially, contacting the debtor makes it possible to consider a possible amicable resolution or to explore alternative means of payment, such as a transfer or a bank cheque. If the dialogue with the issuer of the check fails and the check remains unpaid within 30 days of its first presentation, you have two options. One is to ask the debtor’s bank to issue a certificate of non-payment and the other is to deposit the check back into the account. Upon another unsuccessful payment, the issuer’s bank will automatically send the non-payment certificate.
The non-payment certificate triggers a simplified procedure to recover the amount of the check directly from the issuer without resorting to legal proceedings. Once the debtor has been notified by bailiff or registered letter with acknowledgment of receipt, the certificate constitutes an injunction to pay. The debtor then has 15 days from the date of notification to regularize the situation or provide proof of payment. Failure to do so allows the bailiff to affix the “enforcement order” to the non-payment certificate, which has the same legal value as a court order. The bailiff can then resort to various methods of forced collection, such as the seizure of bank accounts or wages.
It should be noted that for small checks of an amount equal to or less than 15 euros, the issuer’s bank is required to pay, even in the absence of sufficient funds on the account. However, the check must be deposited within one month from its date of issue. In addition, the issuer’s bank may be held liable if it has provided checkbooks to prohibited banks, has not requested the return of checkbooks after payment incidents, has issued checkbooks to new customers without consulting the Banque de France, or if its own fault has resulted in the client’s account being deficient.
