What is what does it mean when a check is returned?

A returned check, also known as a bounced check or a dishonored check, means the bank refused to pay the check when the payee (the person or business receiving the check) tried to cash or deposit it. Several reasons can cause a check to be returned, but they generally fall under the category of insufficient funds or issues with the check itself. Here's a breakdown:

• Insufficient Funds (https://www.wikiwhat.page/kavramlar/Insufficient%20Funds) (NSF): This is the most common reason. It means the payer's (the person who wrote the check) account didn't have enough money to cover the check amount when the payee tried to cash or deposit it.

• Account Closed (https://www.wikiwhat.page/kavramlar/Account%20Closed): The payer's bank account has been closed, meaning the check cannot be processed.

• Stop Payment (https://www.wikiwhat.page/kavramlar/Stop%20Payment): The payer instructed their bank to stop payment on the check. This might be done if the check was lost, stolen, or if there's a dispute over the goods or services provided.

• Refer to Maker: This is a vague reason that the bank provides when they are unable to process the check. It essentially tells the payee to contact the payer (maker of the check) to resolve the issue. It could be due to several reasons, requiring direct communication between the parties.

• Frozen Account: The payer's account has been frozen, often due to legal reasons or suspected fraudulent activity.

• Signature Issues: The signature on the check doesn't match the signature on file with the bank, or the check is missing a signature.

• Altered or Mutilated Check: The check has been altered (e.g., the amount or payee name has been changed) or is damaged in a way that prevents it from being processed.

• Stale Date: The check is too old. Banks usually have a policy that they won't honor checks older than six months.

Consequences of a Returned Check:

• Fees: Both the payer and the payee may incur fees from their respective banks. The payer will likely be charged an NSF fee, while the payee may be charged a returned check fee.

• Legal Action: If the payer doesn't make good on the check, the payee may pursue legal action to recover the funds.

• Damaged Credit: Repeated bounced checks can negatively impact the payer's credit history.