How much can a collection agency charge someone who wrote a bad check, on top of the amount of the check?

Texas AG Opinion JM-557: Bad-Check Collection Fee

Plain-English summary

A district attorney asked how much a private collection agent working for the holder of a bounced check can charge the person who wrote it. The question was specific: on top of the face value of the check and the maximum processing fee, can the agent also bill the drawer for the holder's consequential damages, like a separate bank charge for the dishonor? Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0557.pdf

The AG said no. Article 9022 lets the holder or its agent charge the drawer a reasonable fee that "shall not exceed $15" for collecting a dishonored check, on top of recovering the face value. That is the ceiling, no matter what it actually costs to collect. The Legislature added the fee in 1983 so a retailer could recover the administrative cost of a returned check without having to prove the customer had agreed in advance to a flat fee. Because the fee was meant to offset processing costs and not to compensate for damages, the agent cannot add a consequential-damages charge under the statute. The AG noted the statute does not wipe out the holder's other remedies: consequential damages for breach of the payor's contractual obligations can still be pursued under article 9022(b) and the Business and Commerce Code, just not as an add-on to the statutory collection fee. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0557.pdf

Currency note

This opinion was issued in 1986. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. The returned-check fee statute has since been recodified and the dollar cap has changed. Treat this page as historical context, not current legal advice. Verify the current statute before relying on the $15 figure or any specific rule mentioned here.

Common questions

What can a collection agent legally charge for a bounced check?

Under article 9022, the agent can collect the face amount of the check plus a reasonable processing fee that cannot exceed $15. The AG read the statute's plain language as authorizing that and no more. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0557.pdf

Can the agent add the bank's dishonor charge or other damages to the bill?

No, not under the statute. The AG concluded the $15 cap applies regardless of the total cost of collecting the check, and that the fee was meant to offset administrative processing costs, not to compensate for consequential damages. So a separate charge for the holder's damages is not authorized by article 9022. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0557.pdf

Does that mean the check holder can never recover its actual losses?

No. The AG pointed out that article 9022(b) preserves any other right or remedy, and the statute does not preclude recovering consequential damages for breach of the payor's contractual obligations. The Business and Commerce Code allows an action on either the instrument or the underlying obligation. Those damages just cannot be collected as part of the capped statutory fee. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0557.pdf

Background and statutory framework

Article 9022, V.T.C.S., was enacted by the 68th Legislature in 1983 (Acts 1983, 68th Leg., ch. 617, § 1). Section (a) lets the holder of a dishonored check, or a collection agent retained by the holder, charge the drawer or endorser a reasonable fee not to exceed $15 for seeking collection of the face value after dishonor. Section (b) provides that nothing in the statute affects any other right or remedy the holder may have under a rule, contract, judicial decision, or other statute. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0557.pdf

To read the statute, the AG considered the state of the law at enactment and the problem it was meant to solve, citing Lawson v. Baker, and applied the rule that unambiguous statutes are given effect according to their terms, citing Trimmier v. Carlton, 296 S.W. 1070. Before article 9022, a retailer trying to recoup the cost of a returned check had to prove the customer had contracted to pay a stipulated flat fee, a difficult procedure the statute eliminated. Because the fee was designed only to offset the administrative cost of processing a dishonored check, the AG concluded it does not extend to consequential damages, while noting that section (b) and Business and Commerce Code section 3.802(a)(2) leave the holder free to pursue those damages on the instrument or the underlying obligation. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0557.pdf

Citations and references

The opinion cited the following authorities. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0557.pdf

Statutes:

• V.T.C.S. art. 9022(a), (b) (fee for collecting a dishonored check)
• Tex. Bus. & Comm. Code § 3.802(a)(2) (action on the instrument or the obligation)
• Acts 1983, 68th Leg., ch. 617, § 1, at 3873 (enacting article 9022)

Cases:

• Lawson v. Baker, 220 S.W. 260 (Tex. Civ. App. - Austin 1920, writ ref'd)
• Trimmier v. Carlton, 296 S.W. 1070 (Tex. 1927)

Other authority:

• Attorney General Opinion JM-472 (1986)
• 53 Tex. Jur. 2d Statutes § 162, at 236 (1964)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0557
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0557.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

October 9, 1986

Honorable Barry L. Macha
Criminal District Attorney
Wichita County Courthouse
Wichita Falls, Texas 76301

Opinion No. JM-557

Re: Whether a private check collection agency may charge the drawer for the holder's consequential damages in addition to the face value of the check and the maximum processing fee

Dear Mr. Macha:

You have requested our opinion regarding certain fees which may be charged by a private collection agent for the holder of a dishonored check. Article 9022, V.T.C.S., provides:

(a) The holder of a check or its assignee, agent, representative, or any other person retained by the holder to seek collection of the face value of the dishonored check on the return of the check to the holder following its dishonor by a payor may charge the drawer or endorser a reasonable fee, which shall not exceed $15.

(b) Nothing herein shall be construed as affecting any right or remedy to which the holder of the check may be entitled under any rule, regulation, written contract, judicial decision, or other statute. (Emphasis added).

You ask whether this statute provides a private collection agent with the authority to charge the drawer for a holder of a dishonored check consequential damages (separate bank charge for dishonor fee) in addition to the face value of the check and the $15.00 maximum processing fee. We conclude that it does not.

When it is necessary to ascertain the true meaning of a statute, it is permissible to consider the state of the law at the time of its enactment, the conditions designed to be dealt with, the good intended to be accomplished, and the mischief sought to be prevented or remedied. See Lawson v. Baker, 220 S.W. 260 (Tex. Civ. App. - Austin 1920, writ ref'd); see also 53 Tex. Jur. 2d Statutes § 162, at 236 (1964). Article 9022 was enacted by the Sixty-eighth Legislature in 1983 to permit retailers to charge a processing fee, not to exceed $15.00, for returned checks. Acts 1983, 68th Leg., ch. 617, § 1, at 3873, eff. Aug. 29, 1983; see also Bill Analysis to H.B. No. 921, prepared for House Committee on Business and Commerce, filed in Bill File to H.B. No. 921, Legislative Reference Library. Prior to the enactment of article 9022, a retailer, in order to recoup or off-set the cost of processing a dishonored check, had to prove that the customer, or drawer of a check, contracted to pay a stipulated flat fee if the check was dishonored. Id. Article 9022 eliminated this difficult procedure.

It is clear from the expressed language of section (a) that a collection "agent" of a holder of a dishonored check may "seek collection of the face value" of the dishonored check and charge a processing fee of $15.00. V.T.C.S. art. 9022(a). See also Trimmier v. Carlton, 296 S.W. 1070 (Tex. 1927) (unambiguous statutes are construed to give effect to its terms). Accordingly, section (a) of article 9022 specifically authorizes a collection agent of a holder of a dishonored check to collect the face amount of the check plus a processing fee not to exceed $15.00. See Attorney General Opinion JM-472 (1986).

Section (a) of article 9022 does not authorize any fee in excess of the $15.00 regardless of the total cost of collecting the face value of a dishonored check. As indicated above, the legislative purpose for allowing the fee was to insure that the agent of the holder may collect a "reasonable" fee from the drawer or endorser without the necessity of proving that a contract for a flat fee existed. Bill Analysis to H.B. No. 921, prepared for House Committee on Business and Commerce, filed in Bill File to H.B. No. 921, Legislative Reference Library. Accordingly, the fee was only intended to off-set the administrative cost and expense of processing a dishonored check and not as a compensation for damages. The statute does not preclude recovery for consequential damages for breach of the payor's contractual obligations. See V.T.C.S. art. 9022(b); see also Bus. & Comm. Code § 3.802(a)(2) (an action may be maintained on either the instrument or the obligation).

SUMMARY

Section (a) of article 9022, V.T.C.S., authorizes a collection agent of a holder of a dishonored check to collect the face amount of the check plus a processing fee not to exceed $15.00. However, the provision does not authorize a collection agent to charge an amount to compensate for consequential damages resulting from the collection of a dishonored check.

Very truly yours,

Jim Mattox
Attorney General of Texas

JACK HIGHTOWER
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Tony Guillory
Assistant Attorney General