When a consumer deposits a check into his banking account, he is stating that the check will clear as promised. Because a growing number of checks are returned as noncollectable, many banks and credit unions hold the deposit until payment is cleared. In some cases, a check's funds may be made available before the money actually comes back to the depositor's bank. This is especially true in the instance of payroll checks. If the check bounces, the customer is responsible for repayment.
When a deposited check is returned unpaid, the customer is charged a fee for the returned deposit. Many banks charge between $10 and $35 for such transactions, as of 2009. This fee is charged regardless of the reason for the bad check, and it is up to the consumer to try to get recourse from the check writer.
If a payroll check is cashed and later returned for non-sufficient funds, the consumer is responsible for repaying the amount owed. The customer's account will be handled as if the check were never deposited when it comes to basic accounting. If the money was already spent, the person must repay it to get her checking or savings account back into good standing.
Failure to repay a negative account balance can lead to negative credit reports, inability to open another checking account at most banks through database information recorded by companies such as Chexsystems and---in some cases---legal action. If the depositor is suspected of being involved in a fraudulent check or money order scheme, he may be questioned or even arrested by police.
Depositing only checks from known people and not spending the money until it has cleared is a good practice to avoid serious problems due to depositing bad checks. This is especially important when it comes to selling any goods on the Internet.