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State law change helping business owners collect bad checks

Bad checks can be the nemesis of small businesses, but some business owners are not hesitant to turn to their district attorneys for help.

Pam Schaefer, public information officer with Attorney General Jim Hood’s office, says each district attorney has a division set up to handle these cases as outlined by state statute. “We don’t handle bad check cases, but we are happy to assist all district attorneys when they need us for this or anything else,” she said.

In 2007, the Legislature changed the law to allow business owners to collect attorneys’ fees along with the value of the returned check. That was the first change since 2004 when the fee chargeable for bad checks was increased from $30 to $40 to help businesses offset their losses.

“The law changed last year that helps small businesses with collections concerning our state’s bad check law. Businesses could finally recover the attorneys’ fees as a cost of collection,” said Ron Aldridge, state director of the National Federation of Independent Businesses. “This was a victory for small businesses and a tremendous help in keeping bad check collections from being an automatic loss to them, even when the amount of the check was recovered.”

That’s a change Aldridge’s members have been wanting. The provision also applies to electronic transactions and will allow collection companies to sue a single bad check writer in one legal action for multiple checks to different payees.

“Business owners had not been able to be fully remunerated, but now they have a chance to collect what they deserve,” he said. “The law puts bad checks on a similar level of collection as open accounts.”

After the storm

David Dumond, owner of Progressive Auto Shop in Gulfport, says this change hasn’t prevented him from being stung by out-of-state workers who’ve come to the Coast in the wake of Hurricane Katrina.

“I hardly ever had one before that,” he said. “Most customers were local. Since the storm, it’s been terrible. With out-of-state customers, going to the DA doesn’t do much good. They leave the state and don’t care. But with local people, my only recourse is to go to the DA where hopefully it can be collected.”

Dealing with repeat, local customers prevents Safeway Cleaners from receiving many worthless checks. Owner Linda Ferguson says the Rankin County district attorney is diligent and has helped when needed.

Knowing your customers

“We sometimes have some transients at the Lakeland Drive location who do this, but we’ve known most of our customers for years,” she said. “If there’s a problem with a check, we give them a chance to handle it without a fee.”

Laverne Stanford says the same thing is true at Stanford Feed & Seed in Carrollton. “Thankfully, we haven’t had many. We’re very careful of what we take,” she said. “The state law helps and our DA helps us collect them.”

Business checks are more collectable than personal accounts, says Harold Neal, co-owner of Upton-Neal Interiors in Pearl. “What we do depends on the size of the check,” he said. “The laws are tougher on business accounts, too.”

Although his business gets very few bad checks, Neal is scared of what the country may face as the economy worsens.

Contact MBJ contributing writer Lynn Lofton at llofton656@aol.com.

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