Colorado Bad Check Laws

Writing a check against an account with insufficient funds results in the payee -- the individual or business to whom the check is made out -- receiving the check back from their bank. The checkwriter's bank shows the check as "returned," and levies a fee on the writer. In contrast to the law in other states, Colorado does not require the payee to run the check through his own account a second time or contact the checkwriter. That means a bounced check that's not made good can go straight to a collection agency. Once a collection agency is on the case, the legal sanctions kick in.

As of 2015, Colorado law allowed a business to charge a $20 nonsufficient funds fee, as long as the fee was either posted on the business premises or written into a signed agreement. State law also permits collection costs in the amount of $20 or 20 percent of the check amount, whichever is greater. On the day the collection agency mails a notice of non-payment and demand for payment to the check-writer, a 15-day deadline starts for payment in full. If the deadline is missed, the collection agency can bring the matter to a civil court.

If the writer of a bounced check is unable or unwilling to pay the check amount as well as the legally sanctioned charges, then the payee or a collection agency may file a claim in civil court. Colorado law makes the defendant in such a case liable for not less than $100, or three times the original check amount, whichever is more. In addition, the plaintiff may collect attorney's fees and costs, which can run much higher than the original check, as well as any damages incurred in connection with the bounced check.

The Colorado statute on bounced check does not apply in the case of a bank error which caused the return of the check. In addition, if there's a dispute between buyer and seller over financial terms, merchandise or property purchased with the check, and the buyer stops the check as a result, the bounced check statute does not apply.