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 30 
  2.19  days of the date of mailing.  If after 30 days the issuer fails 
  2.20  to remit payment of the check amount and the $30 service charge, 
  2.21  the payee or holder may send a second notice, entitled notice of 
  2.22  failure to pay.  That notice must inform the issuer that the 
  2.23  payee or holder has not received the payment of the original 
  2.24  face amount of the dishonored check and the $30 service charge 
  2.25  as demanded in the notice of dishonor.  The notice of failure to 
  2.26  pay must inform the issuer that failure to remit payment as 
  2.27  demanded within ten days of the mailing of the notice of failure 
  2.28  to pay will permit the payee or holder to immediately impose an 
  2.29  additional charge of $100 or the face value of the check, 
  2.30  whichever is greater.  If the amount of the dishonored check ~~is~~ 
  2.31  and the service charge of $30 are not paid within ~~30~~ ten days 
  2.32  after the payee or holder has mailed ~~notice of dishonor pursuant~~ 
  2.33  ~~to section 609.535 and a description of the penalties contained~~ 
  2.34  ~~in this subdivision~~ the notice of failure to pay, whoever issued 
  2.35  the dishonored check is liable to the payee or holder of the 
  2.36  check for: 
  3.1      (1) the amount of the check, the service charge as provided 
  3.2   in paragraph (a), ~~plus a civil penalty of up to~~ and an 
  3.3   additional charge of $100 or the value of the check, whichever 
  3.4   is greater~~.  The civil penalty may not be imposed until 30 days~~ 
  3.5   ~~following the mailing of the notice of dishonor.  A payee or~~ 
  3.6   ~~holder of the check may make a written demand for payment of the~~ 
  3.7   ~~civil liability by sending a copy of this section and a~~ 
  3.8   ~~description of the liability contained in this section to the~~ 
  3.9   ~~issuer's last known address.  Notice as provided in paragraph~~ 
  3.10  ~~(a) must also include notification that additional civil~~ 
  3.11  ~~penalties will be imposed for dishonored checks for nonpayment~~ 
  3.12  ~~after 30 days~~; 
  3.13     (2) interest at the rate payable on judgments pursuant to 
  3.14  section 549.09 on the face amount of the check from the date of 
  3.15  dishonor; and 
  3.16     (3) reasonable attorney fees if the aggregate amount of 
  3.17  dishonored checks issued by the issuer to all payees within a 
  3.18  six-month period is over $1,250. 
  3.19     (c) This subdivision prevails over any provision of law 
  3.20  limiting, prohibiting, or otherwise regulating service charges 
  3.21  authorized by this subdivision, but does not nullify charges for 
  3.22  dishonored checks, which do not exceed the charges in paragraph 
  3.23  (a) or terms or conditions for imposing the charges which have 
  3.24  been agreed to by the parties in an express contract. 
  3.25     (d) A sight draft may not be used as a means of collecting 
  3.26  the ~~civil penalties provided in this section~~ additional charges 
  3.27  of $100 or the face value of the check without prior consent of 
  3.28  the issuer. 
  3.29     (e) The issuer of a dishonored check is not liable for the 
  3.30  ~~penalties described in paragraph (b)~~ additional charges of $100 
  3.31  or the face value of the check if a pretrial diversion program 
  3.32  under section 628.69 has been established in the jurisdiction 
  3.33  where the dishonored check was issued, the issuer was accepted 
  3.34  into the program, and the issuer successfully completes the 
  3.35  program. 
  3.36     Subd. 3.  [~~NOTICE OF DISHONOR REQUIRED~~ MAILING AND FORM OF 
  4.1   NOTICE REQUIREMENTS FOR NOTICE OF DISHONOR AND NOTICE OF FAILURE 
  4.2   TO PAY.] (a) Notice of nonpayment or dishonor and notice of 
  4.3   failure to pay that ~~includes~~ include a citation to this section 
  4.4   and section 609.535, and a description of the penalties 
  4.5   contained in these sections, ~~shall be sent by the payee or~~ 
  4.6   ~~holder of the check to the drawer by certified mail, return~~ 
  4.7   ~~receipt requested, or by regular mail, supported by an affidavit~~ 
  4.8   ~~of service by mailing, to the address printed or written on the~~ 
  4.9   ~~check.~~ shall be substantially in the form provided in paragraphs 
  4.10  (d) and (e), respectively.  The notices shall be mailed by the 
  4.11  payee or holder of the check to the issuer by certified mail, 
  4.12  return receipt requested, or by regular mail, supported by proof 
  4.13  of mailing, to the address printed or written on the check, or 
  4.14  to the issuer's last known address.  The proof of mailing shall 
  4.15  be prepared and provided, at no cost, to the issuer of the 
  4.16  dishonored check upon written request by the issuer to the 
  4.17  sender of the notice. 
  4.18     (b) The issuance of a check with an address printed or 
  4.19  written on it is a representation by the ~~drawer~~ issuer that the 
  4.20  address is the correct address for receipt of mail concerning 
  4.21  the check.  Failure of the ~~drawer~~ issuer to receive a regular or 
  4.22  certified mail notice sent to that address is not a defense to 
  4.23  liability under this section, if the ~~drawer~~ issuer has had 
  4.24  actual notice for 30 days that the check has been dishonored.  
  4.25     ~~An affidavit of service by~~ Proof of mailing shall be 
  4.26  retained by the payee or holder of the check.  
  4.27     (c) All forms must be clearly legible and printed in not 
  4.28  less than the equivalent of 10-point type.  A form that uses 
  4.29  both sides of a sheet must clearly indicate on the front side 
  4.30  that there is additional information on the back side of the 
  4.31  sheet. 
  4.32     (d) The Notice of Dishonor must be in the following form 
  4.33  and mailed as required in this section.  All forms must be 
  4.34  clearly legible and printed in not less than the equivalent of 
  4.35  10-point type.  A form that uses both sides of a sheet must 
  4.36  clearly indicate on the front side that there is additional 
  5.1   information on the back side of the sheet. 
  5.2                            First Notice 
  5.3                     Notice of Dishonored Check 
  5.4   Date:            ......................
  5.5   Name of issuer:  ......................
  5.6   Street Address:  ......................
  5.7   City and State:  ......................
  5.8   Total Now Due:   ...................... 
  5.9      You are, according to law, hereby notified that the checks 
  5.10  listed below have been dishonored and returned unpaid by the 
  5.11  issuing financial institution.  Under Minnesota law, unless the 
  5.12  checks are paid in full within five business days after mailing 
  5.13  of this notice, the payee or holder of the checks will or may 
  5.14  refer the matter to proper authorities for prosecution under 
  5.15  Minnesota Statutes, section 609.535, subdivision 3. 
  5.16     A service charge of $30 per check has been imposed under 
  5.17  Minnesota Statutes, section 332.50.  If the dishonored checks 
  5.18  plus the service charges are not paid within 30 days after the 
  5.19  mailing of this notice, the holder of the check may send you a 
  5.20  notice of failure to pay notifying you that you will be liable 
  5.21  to pay an additional service charge in the amount of $100 per 
  5.22  check or the face value of the check, whichever is greater.  The 
  5.23  additional charges will be imposed if payment of the value of 
  5.24  the checks plus the service charges are not paid within ten days 
  5.25  of the mailing of the notice of failure to pay. 
  5.26  Check No.   Check Date   Payee   Check Amt.   Service Chg. 
  5.27  .............................................................. 
  5.29     Payment is to be sent to the following name and address: 
  5.30  Payee or Holder: ...............................
  5.31  Mailing Address: ...............................
  5.32                   ...............................
  5.33                   ...............................
  5.34  Telephone Number: (   ) ........
  5.35     (e) The Notice of Failure to Pay must be in the following 
  5.36  form and mailed as required in this section.  All forms must be 
  6.1   clearly legible and printed in not less than the equivalent of 
  6.2   10-point type.  A form that uses both sides of a sheet must 
  6.3   clearly indicate on the front side that there is additional 
  6.4   information on the back side of the sheet. 
  6.5                           Second Notice 
  6.6                      Notice of Failure to Pay 
  6.7   Date:            ......................
  6.8   Name of Issuer:  ......................
  6.9   Street Address:  ......................
  6.10  City and State:  ......................
  6.12  Total Now Due:  $......................
  6.14  Total Due After Ten Days:   $..........
  6.15     You are, according to law, hereby notified that the checks 
  6.16  and service charges listed below continue to remain unpaid.  
  6.17  Under Minnesota Statutes, section 332.50, unless the checks and 
  6.18  service charge of $30 per check are paid in full within ten days 
  6.19  after mailing of this second notice, the payee or holder of the 
  6.20  checks will assess an additional service charge of $100 for each 
  6.21  dishonored check or the value of the check, whichever is 
  6.22  greater, and/or may refer the matter to proper authorities for 
  6.23  prosecution under Minnesota Statutes, section 609.535, 
  6.24  subdivision 3. 
  6.25  Check No.   Check Date   Payee   Check Amt.   Service Chg.
  6.26  ..........................................................
  6.28     Payment is to be sent to the following name and address: 
  6.29  Payee or Holder:  ....................................
  6.30  Mailing Address:  ....................................
  6.31                    ....................................
  6.32                    ....................................
  6.33  Telephone Number: (   )..........
  6.34     Subd. 4.  [PROOF OF IDENTITY.] The check is prima facie 
  6.35  evidence of the identity of the ~~drawer~~ issuer if the person 
  6.36  receiving the check:  
  7.1      (a) records the following information about the ~~drawer~~ 
  7.2   issuer on the check, unless it is printed on the face of the 
  7.3   check:  
  7.4      (1) name; 
  7.5      (2) home or work address; 
  7.6      (3) home or work telephone number; and 
  7.7      (4) identification number issued pursuant to section 
  7.8   171.07; 
  7.9      (b) compares the ~~drawer's~~ issuer's physical appearance, 
  7.10  signature, and the personal information recorded on the check 
  7.11  with the ~~drawer's~~ issuer's identification card issued pursuant 
  7.12  to section 171.07; and 
  7.13     (c) initials the check to indicate compliance with these 
  7.14  requirements.  
  7.15     Subd. 5.  [DEFENSES.] Any defense otherwise available to 
  7.16  the ~~drawer~~ issuer also applies to liability under this section. 
  7.17     Sec. 2.  [EFFECTIVE DATE.] 
  7.18     Section 1 is effective August 1, 2001, and applies to 
  7.19  checks issued on or after that date.