Check Re-presentment: What It Is and Why It Matters to You

Washington, DCYou may have never heard of it. You may have never seen it either, or for that matter, given your permission for it. And yet you have potentially felt its sting without even knowing what it is. What’s more, that warm feeling that comes with assuming your banking and financial partners have your best interests at heart may have little to do with corporate generosity and everything to do with the increasing amounts of wool being pulled over the eyes of the unwitting consumer, adding to the darkness.

It’s called check re-presentment. Never heard of it? You would be forgiven if you hadn’t. But the fact remains that consumers who write a check to an entity for payment of product or service opens themselves up to the potential for unwanted fees - especially for those consumers who run such tight checking accounts that the occasional NSF check (non-sufficient funds) is a distinct possibility.

It could or perhaps should result in a Bounced Check lawsuit, and, indeed, already has - when a Check Re-presentment lawsuit was brought back in 2011 and settled three years later for $1.825 million.

Check re-presentment is a complex scenario, and explaining it could give you a headache. But it’s good knowledge to have, especially since it could be costing you significant dollars without you even realizing it - and there are aspects of it that could potentially be illegal.

Normally, when a consumer writes a check to a business (merchant) for a product or service, standard NSF fees could apply if there wasn’t enough money in the consumer’s checking account, and the check bounced. An NSF charge would apply, and the original bill would remain unpaid until the check eventually clears.

And here’s a new twist: instead of sending the bounced check back to the merchant, the bank may instead opt to send the bounced check to a check re-presentment company. That company, on the merchant bank’s behalf, will make repeated and strategic attempts to collect the amount owing. The merchant - the original provider of the product or service - will get paid, but so will the merchant bank and the re-presentment company, by way of re-presentment fees charged to the consumer.

And the consumer may not even know about it. Unless a consumer was to review his or her bank statements carefully and reconcile all debits and transactions, he or she may be totally unaware of the fees.

It is the “not knowing” part that may comprise illegalities with check re-presentment, which in turn could prove fodder for a Bounced Check Re-presentment lawsuit. To wit, according to law any entity removing funds from a consumer’s account usually requires the consumer’s prior knowledge that such a fee might be forthcoming - and usually the consumer has to agree, or at the very least provide notice that he or she is aware of that possibility.

Instead, a check re-presentment fee (or fees) could be debited from a consumer’s account in the form of an electronic check, with the proceeds usually split between the merchant bank and the check re-presetment enterprise. The consumer pays such fees without even knowing what they are, what they’re for or to whom they are paid.

Re-presentment fees vary, but could go as high as half the value of the original bounced check. Such potentially high fees lend themselves to a Catch-22, in that fees debited without the consumer’s knowledge are only adding to the environment contributing to the bounced check in the first place…

The plaintiff in the 2011 Bounced Check Ripoff lawsuit had written a check for $1,000 that bounced. Instead of the check coming back as NSF, it was issued to a Check Re-presentment company, which eventually charged the plaintiff a $50 fee. The plaintiff fought the fee, and the legality thereof, through a Bounced Check Recovery lawsuit that eventually settled for almost $2 million.

If would behoove any consumer who writes a check on a regular basis to a merchant for a product or service to check bank statements carefully for suspicious transactions. You may not even be aware that a check had bounced - and yet you may have been charged a fee or a series of fees through the issuance of an electronic check from the Re-presentment company that you did not sign, did not approve nor had no knowledge of.

It could, in turn, be the basis for a Bounced Check Ripoff lawsuit.