Statutory service charges under Cal. Civ. Code § 1719

Cal. Civ. Code § 1719: Statutory Service Charges

For a check returned unpaid for insufficient funds or stopped payment, the payee may generally seek a service charge of up to $25 for the first such check and up to $35 for each subsequent check to that payee. The service charge is subject to statutory exceptions and, when treble-damages liability applies, cannot be recovered in addition to those damages.[1]

Amount and scope

The statute applies when a check is dishonored for lack of funds or credit, because the drawer has no account with the drawee, or because the drawer instructed the drawee to stop payment.[1] The charge is a maximum, not an automatic entitlement to the maximum: the statutory text says “not to exceed” the applicable amount.

When the charge may be unavailable

• Treble damages after demand. If the drawer does not pay the check amount, service charge, and mailing costs within 30 days after a qualifying certified-mail demand, the drawer instead becomes liable for the check amount (subject to qualifying partial payments) and statutory treble damages. Once that liability attaches, the payee may not also recover the service charge or demand-mailing costs for that check.[1]
• Good-faith stop-payment dispute. A drawer who stopped payment based on a reasonable belief of a legal right to withhold payment is not liable for the service charge, mailing costs, or treble damages. The payee must prove by clear and convincing evidence that no good-faith dispute existed to recover those amounts.[1]
• Bank error or delayed benefit deposit. The service charge is unavailable if the drawer provides written confirmation that the check was returned because of the financial institution’s error, or that insufficient funds resulted from a delay in a regularly scheduled direct deposit of Social Security or government-benefit assistance.[1]

Demand and procedure

The 30-day demand procedure is the route to treble damages; it is not a basis to collect both treble damages and the service charge for the same check. For a stop-payment check, the statute prescribes notice language and requires the court to receive the written demand and a signed certified-mail receipt showing delivery or attempted delivery if refused before awarding damages or costs.[1] A payee seeking damages for a stop-payment check must also show a reasonable effort to reconcile or resolve the dispute before filing suit.[1]

A federal district court, addressing demands for California statutory charges on dishonored checks, concluded that a debt collector proceeding under § 1719 could not demand the statutory service charge together with interest. That is a district-court decision, not a controlling appellate ruling, and its conclusion should be treated accordingly.[2]

Practical point: For a stop-payment check, use the statute’s required notice form and retain the demand and certified-mail documentation. The statute makes compliance with its remedy requirements mandatory.[1]