A NEW OPPORTUNITY FOR GOVERNMENTAL UNITS
TO INCREASE REVENUES!

By RICHARD M. HETZER

Recent Illinois legislative amendment (Public Act 87-624) amending the Illinois Uniform Commercial Code has made it possible for retail establishments and municipal governments to charge up to $25 for each returned check. This fee is applicable to checks returned due to non-sufficient funds, closed accounts or insufficient credit.

By taking advantage of this opportunity, local governments have the ability to recover more of the costs incurred when dealing with returned checks. These increased revenues can be used to offset the costs associated with additional work, time and handling costs which are ostensibly paid for by community tax dollars.

The UCC also provides as an alternative the ability to collect all costs and expenses, including reasonable attorneys' fees, incurred in connection with the collection of the amount for which the returned check or draft was written, instead of the fee (whichever is greater). There are a number of additional requirements to consider when choosing the alternative method. Always consult with your governmental unit's attorney for advice and guidance on these issues.

Recent banking trends and information indicates a continuing increase in returned checks. A fee for checks that are returned should be instituted both as an additional source of increased revenue, to cover costs, and as a deterrent for those writing bad checks. •

Page 20 / Illinois Municipal Review / April 1992