HomeMy WebLinkAboutAgenda Report - September 3, 1997 (48)� of tcCITY OF LODI
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COUNCIL COMMUNICATION
AGENDA TITLE: Set fees for Returned Check Charges of $10.00 for each fust returned check
and $25.00 for each subsequent returned check.
MEETING DATE: September 3, 1997
PREPARED BY: Finance Director
RECOMMENDED ACTION: That the City Council, by resolution, set fees of $10.00
for each first returned check and $25.00 for each
subsequent returned check, as provided by AB 2643
effective January 1, 1997.
BACKGROUND INFORMATION: In 1988, a returned check service charge in the amount
of $10.00 was initiated in accordance with Section 1719
of the Civil Code which provided that damages equal to
treble the amount of a non -sufficient f'.tnds check could
he enforced under specific circumst"=.ccs. In 1988, 452 checks were returned for non -sufficient funds, referred
to maker, or account closed. In the fiscal year 1996197 a total of 916 checks were returned for a 103% increase
in a nine (9) year period. Of that total an average of 51% were at the 90 day delinquent position subject to
termination for non-payment of utilities. At that point of delinquency, a $10.00 late fee is added to the total
bill. That group of utility customers avoided immediate turn-off due to non-payment and the $25.00 late fee
that would have occurred on the next bill by submitting a check drativn on non -sufficient funds. Analysis of
collection attempts by Finance office staff has determined the cost to collect for a returned check to be $25.36.
Additional effort by field personnel increases the total cost to 5105.26 for each returned check if service is
terminated.
On September 27, 1996, Governor Wilson signed into law AB 2643 which became effective January 1, 1997.
The new law provides that a check -writer of the dishonored check shall be liable to the "payee" (person named
on the check) for a service charge in an amount not to exceed $25.00 for the first check dishonored, and an
amount not to exceed S35.00 for each subsequent check dishonored. A service charge for a dishonored check
is not only intended to recover bank charges passed through to the City of Lodi, but also to discourage this type
of behavior.
FUNDING REQUIRED: None
Vicky MCAthi , Finance Director
Prepared by: Maxine Cadwallader, Revenue Manager
APPROVED: T
H. Dixon Flynn -- City M nager
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PAM?
Display 1935-1996 Bill Text - IN-70PY.;MON
BILL NLP2ER: AB 2E93
BILL TEXT
CHAPTER 1000
FILED WITH SECRETARY OF STATE S---PT-E!—,SER 29, 1596
k?-RO'JED BY GOV-SMOR SEPTE14BER 27, 1596
rASSED THE ASS?:IMLY AUGUST 30, 1996
PASSED THE SENATE AUGUST 21, 1996
Al-MIMED Il: SENATE AUGUST 20, 1996
;uMENDED IN SENATE AUGUST 5, 1996
AMENDED IN SENATE JLj:w 17, 1596
A.M. N-DED IN ASSEMMLY APRIL 18, 1396
IZiMODUCED BY Assembly Members Eordonaro and Xaloogian
FEBRUARY 21,•1996
rz act to amend Section 1719 of the Civil Code, relating to commercial
pater.
LBGISLATI'JE COUNSEL'S DIG;ST
AB 2543,' 3ordo:aro. Com-mercial paper: insufficient f"Inds.
.3xisting law creates a cause of action for the amount of a check passed on
insufficient funds minus a_-iy partial payment made within 30 days of a
s: eci£ied written de -nand for payment, damages equal to treble that amo-,I .t, as
specified, plus the costs of mailing the written demand for pa}trent only if
the person who passed the check failed to Fay either the amount of the check
or the amo-ant of the bad check fee charged to the payee by his or her
financial institution within a prescribed period, except as s:ecified.
This bill would revise and recast these provisions to create a cause of
action for the amount of the check and a specified service charge, payable to
the payee. The bill would provide that the person shall have 30 days from the
date a prescribed written demand was mailed to pay the amo,=t of the check,
=he service charge, and the cost to mail the deryand. If the person fails to
p_y this .mount in full, this person shall instead be liable for specified
ansunts, including treble damaces. The bill would make conforming than^yes.
The bill would, among other things, provide that for purposes of the above
prcvisio:s, the term "payee" includes an ass`_g.ea or holder of the check.
1
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nisplay 1995-1996 rill ieXt - Ii:FOR1,1ATI011
_.LL I47,1-:ZZA: AS 2643
SILL TEXT
i E PnOPLE Or TRE STATE OF CALIFOR-NIA DO c.NACT AS FOLLOWS:
SECTIGN 1. Section 1719 of the Civil Code is amended to read:
1719. (a) (1) 14otwithstandirg ary penal sanctions that may apply, any
person who passes a cheek on insufficient finds shall be liable to the payee
.CY. the arno,uit of the check and a service charge payable to the payee for as
amcu_nt not to exceed twenty-five dollars ($25) for the first check passed on
insufficient ::ends and an amount not to exceed thirty-five dollars ($35) for
each subsequent check to that payee passed on insuffic_ent'zurds.
(2) i;ctwithstanding any per_al sanctions that may apply, any person who
:asses a check on insufficient funds shall be liable to the payee for damages
e _ual to treble the amount of the check if a written remand For parmant i.a
ailed =y certifi,nd mail to the person who had Las:,ed a check on
insufficient
ft..:.ds and the written demand informs this person of (A) the provisions of this
section, (3) the amount of the check, and (C) the amount of the service charge
payable to the payee. The person who had passed a check cn insufficient fluids
shall have 30 days from the date the written demand was mailed to pay tae
amv..nt of the check, the amount of the service charge payeble to the payee,
and the tests to mail the written demand for payment. If this person fails to
pay in full the ar.iount of the check, the service charge payable to the payee,
--i the costs to mail the written demand within this aeriod, this person shall
t=sn b: liable instead for the amount of the check, minis any partial payments
-acs toward the amount of the check or the sex -,rice charge within 3o days of
t`e written domand, and damages equal to treble that amount, which shall not
_e less than one _^.undred dollars ($100) nor raore than one thousand five
::aired dollars (,'1,$00). When a Ferscn becomes liabls for treble damages for
a check that is the subject of a written demand, that person shall no longer
'tee liable :or any service charge for that check and any cost=
r1 =CE:1 dE:•sand . ... - _ . _.. .
{3) lot withstanding paragraphs (z) and (2), a person shall not be liable
=..r the ssrvica charge, costs to mail.the written dema.r..d, or treble damages if
.'.a cr she steps yayrr,ant in oxder to resolve a good faith dispute with the
,ayee. The payee is entitled to the service charge, -costs to mail the written
demand, or treble damages only upon proving by clear and cQivinci:g evidence
zhat there was no good faitl dispute., as deem -td in vubdivision (b) .
(4) Notwithstanding paragraph (1), a person shall nct be liable -ander that
aragra:h for the service charge if, at any time, he o: she presents the payee
--th written confirtat_on by his or her financial in_titutian that•the check.
.:as returned to the payee by the financial instituticn due to an error cn the
of the find tial institution.
(5) Notwithstanding paragraph (I), a person shall not he liable w)der that
_=,�graYZ for the service ci,arse if the person presents the _aye. with .itten
A'JG- 4-97 EN 10:45 C3 STOCKTON FAX NO. 209941410795 P. 03
PAGE 3
Display 1995-19'6 Bill Tent - Iti:pP�'ATIC:�
SILL 14U•2 -.ER: AS 2643
BILL TEXT
confirmation that his or her account had insufficient funds as a result of a
relay in the regularly scheduled transfer of, or the posting of, a direct
deposit of a social security or government benefit assistance payment.
(6) As used in this subdivision, to "pass a check on insufficient funds"
means to make, utter, draw, or deliver ally check, draft, or order for the
payment of money upon any bank, depository, person, firm, or corporation that
refuses to honor the check, draft, or order for any of the following reasons:
(A) Lack of funds or credit in the account to pay the check.
(S) The person who wrote the check does not have an account with the
drawee.
(c) The person who wrote the check instructed the drawee to step payr.ent on
the check,
(b) Vor purposes of this section, in the case of a stop payment, the
existence of a "good faith dispute" shall be determined by the trier of fact.
A "good faith dispute" is one is which the court finds that the drawer had a
reasonable belief of his or her legal entitlement to withhold payment.
Grounds for the entitlement include, but are not limited to, the following:
services were not rendered, goods were hot delivered, goods or services
purchased are faulty, not as promised, or otherwise unsatisfactory, or there
was
an uvcrcharge."
(c) In the case of a step paym_nt, the notice to the drawer required by
this section shall he in substantially the following fora:
"o; _
(name of drawer)
(name of payee).
for $
1;OT:Cz
is to payee of a check you wrote
The check was not paid because
(amount)
you stopped payment, and the payee demands pa-„,cn=. You may
have a good faith dispute as, to whether you owe the full amount.
if you. do not have a good faith dispute with the payee arA f---A-1-
to
e.ilto pay the payee the full araoi=t of the check in cash, a service
charge of an a -mount not to exceed twenty-five dollars ($26) for
the first check passed on insufficient funds and an amount not to
exceed thirty-five dollars ($35) fez each subsequent check
passed on insufficient funds, and the costs to mail this notice
within 30 days after this notice :;as R:ailad, you could be sued
and held responsible to pay at least both of the following:
(1) .he amount Of t_— heck.
(2) Da -,aces of at least one hundred dollars (.^-,100) or, if
richer, three ti.•,es the amount of the cher{ up to one thousand
five hundred dollars ($1.500) .
If the court detafnines that ro•a do hove a good faith dispute
nth the payee, ycu will not 1^.a` a to _nay the service charge,
treble da -mages, or mailing cost.
PAG E 4
Display 1555-1:55 Sill Text -=\rO;,Je_%TION
BILL NUMBER: '.3 :543
BILL TEXT
If you stepped pay^nent because you have a good faith dispute with
the payee, you should try to wtrk out your dispute with the payee.
You can contact the payee at:
(name of Payee)
(street address)
(telephone number)
You may wish to contact a layer to discuss your legal
r'ghts and responsibilities.
(nar.,e of sender of notice)
(d) in the case of a step payment, a court may not award damages or costs
=n.4er this sectio -t unless the court receives into evidence a Cory of the
written demand which, in that case, shall have been sent to the drawer and a
s_gz.ed certified mail receipt showing delivery, or attempted delivery if
refused, of the written demand to the drawer's last known address.
(e) A cause of action under this section may be brought in small claims
court by the original payee, if it does not exceed the jurisdiction of that
court, or in any of^er appropriate court. The payee shall, in oder to
_Cover damaa3es btc.-"ze 1,4he drawer iia;tructed the drawee to stop payment, show
to the satisfaction of the trier of fact that there was a reasonable effort on
the part of the payee to reconcile and resolve tha dispute prior to pursuing
t:*-_ disp.2te` through the courts.
(f) A cause of action wider this section may be brought in municipal court
by a holder of the check or an assignee of the payee. Woxaver, if the
assignee is acting on behalt of the payee, for a flat fee or a percentage fee,
tie assignee may not charge the payee a greater flat fee or percentage fee for
that portion of the amount collected that represents treble damages than is
charged the payee for collecting the face amount of the check, draft, or
order. This subdivision shall not apply to an action brought in small claims
court.
(g) Notwithstanding subdivision (a), if the payee is a -,,)•-,nicipal court, the
written demand for paj,- snt described in subdivision (a) r..ay be ;,ailed to the
drawer by a municipal court clerk. Notwithstanding subdi-:ision (d), in the
case of a stop pay -nt where the demand is mailed by a municipal court clerk,
a court :-ay not award damages or costs pursuant to subdivision (d), unless the
court receives into evidence a copy of the written demand, and a certificate
of mailing by a m•.:nicipal court clerk in the form provided fcr in iuhdivision
(i) of Section 1013a of the Code of Civil procedure for service in civil
actions. For purposes o' this subdivision, in courts where a single court
cler'r, serves More t: =n o.::4 court, the clerk shall be deemed t;.e court clerk of
each court.
(h) of this section in regard to remedies are mandatory
11DC.1 a court.
(i) The assicnee of the payee or a holder of the check r„ay demand, recover,
or enforce the se; -vice charge, damages, and costs specified in this _ecticn to
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PAGE 5
'uisplay 1555-1995 Bill Text - INF0PFNTIC24
BILL Mum'BER: F.3 2543
BILL TEXT
the Sable eXtent as the original payee,
(j) (1) A drawer is liable for damages and costs only if all of the
requirements of this section have been satisfied.
-- ;� (2) The drawer shall in no event be liable more than once under this
section on each check for a service charge, danages, or costs.
(Y.) Nothing in this section is intended to condition, curtail, or otherwise
prejudice the rights, claims, remedies, and defenses under Division 3
(commencing with Section 3101) of the Co„inercial Code of a drawer, payee,
assignee, or holder, including a holder in due course as defined in Section
3302 of the Commercial Code, in connection with the e.forcrament of this
section.
By Ron Sargis, CAC Legal Counscl
On September 27, 1995, Gover-
nor Wilson signed into law AB 2643
which created an auto ra c statutory
merchant bad check service charge. This
new law brings to a close the attacks
made by debtors on bad check service
charges and the folklore which was
created around recent cases. Although
the courts which reviewed this issue
have held that then exists two indepen-
dent legal theories for the bad check
service charge under current law,
contract and Commercial Code theories,
this legislation puts to an end the dispute
being created by a very small group of
debtors who seek to avoid paying a
merchant bad check service charge for
their dishonored check.
This legislation, which was
spearheaded by the California Retailers
Association amends the current treble
damage statute so as to make a merchant
bad check service charge an integral
part of the process. This law becomes
effective January 1, 1997. At this time, 1
think it appropriate to review these new
provisions and how the new law should
be applied.
Paiagraph (a)(1) of Civil Codo
Section 1719 creates the right to bad
check service charge upon dishonor of
the check. The dishvnvr of the check
may be due to lack of funds or credit to
pay the check, a closure or nonexistence
of account, or a stop payment where
tl.cm is not a good faith dispute. These
grounds and dishonors are the same as
under current law.
The new law provides that a
check -writer of the dishonored check
shall be liable to the "payee" (person
nantcd on the check) for a service charge
in an amount not to exceed $25.00 for
the first check dishonored, and an
amount not to exceed $35.00 for each
subsequent check dishonored. First, with
respect to the "amount not to exceed
525.00," various merchants had different
opinions as to the bad check service
charge that was appropriate for their
establishment, so it is left to the mer-
chant to set the amount charged for a
dishonored check. The $35.00 amount
for the second and subsequent dishon-
ored -checks by thr check -writer to the
merchant was in part based upon the fact
that the actual cost of handling a
dishonored check exceeded $25.00 as
documented by the data assembled by
the Retailers Association. Therefore, for
the situation where a cltcck-writer issues
multiple dishonored checks to a mer-
chant, there was very little sympathy
shown for him or her with respect to the
bad check charge.
Paragraph (ax2) of civil Code
Section 1719 will now be the treble
damage paragraph. It provides that a
check -writer of a dishonored check shall
be liable for an amount equal to treble
the amount of the check if a written
demand for payment is mailed by
certified mail to the check -writer, and
the notice informs the check -writer of
(A) the provisions of Civil Cede
Section 1719, (13) the amour,% of the
check, and (C) the amount of the
service charge payable to the payee. If
the check -writer does not pay the
amount of the check, the amount of the
service charge, and the cost of mailing
this written demand within 30 days from
the date it was mailed, then the check -
writer shall be liable for the amount of
the check, minus any partial payments
made toward the check or the service
charge within 30 days of the demand,
and damages equal to treble that
amount. The treble damages shall
continue to not be less than $100.00 nor
more than $1,500.00.
AB 2643 adds new paragraphs (4)
and (5) to Civil Code Section 1719(a).
These paragraphs provide that the
check -writer is not liable for the 525.00/
$35.00 service charge if he or she
presents the payee with written conftr-
madon hunt the uuar,cial institution that
the check was returned and due to an
error on the part of the financial institu-
tion itself. Additionally, the check -writer
is not liable for the 525.00/535.00
service charge if he/she presents the
payee with written confirmation that the
dishonor occurred because of a delay in
the regularly scheduled transfer of, or
the posting of, a direct deposit social
security or government benefit assis-
tance payment. These two very explicit
exceptions were carved out of the
general automatic liability for the bad
check service charge, and the burden is
on the check -writer to produce the
documentation. Fieaw aiso note that
thtse exceptions Fere only for the bad
check service charge, and check -writer
will remain liable for the treble damages
if they fail to pay within the 30 -day
notice period the face amount and the
cost of mailing the written demand.
Paragraph (c) of Section 1719
contains the amended statutory notice
(Continued)
`.ovember 19G6 I GottpGtor'a Ink 27
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cases. This also provides a good form
for you to check your standard NSF
treble damage notice form against as
part of your periodic form review,
Paragraph (e) of Section 1719 was
clarified to provide that a small claims
court action may be brought by the
original payee (merchant) on the
dishonored check if it does not exceed
the jurisdictional limits of that court.
The refertnce to "original payee" was
added at the request of the Attorney
General's office to avoid any confusion
that .his paragraph would have created
jurisdiction for assignees in small claims
court.
Paragraph (f) of Civil Code
Section 1719 was amended to slat= that
not only the assignee, but also the
"holder of the check" could bring an
action in municipal court for a negoti-
ated check. This clarification was
requested by the bankers. Tflc holder in
due course is a specifically defined
person under the Commercial Code and
is different fiorn an assignee.
�� Cotiector`a lit( / Xv,trm1Kr 199E
Paragraph (h) of Civil Code
Section 1719 continues to state that the
remedies set forth in this section are
mandatory upon the court. This provi-
sion is in current law and was put into
statute to codify (make part of a statute
rather than just in a court decision) the
District Court of Appeal decision
directing that the trial court cannot have
any discretion in cithcr wording or the
amount of the treble damages.
New paragraph (i) of Ci%il Code
Section 1719 expressly states that the
assignee of the original payee or holder
of the check may demand, recover or
enforce the service charge, damages and
costs to the same extent as the original
payee. This provision makes it clear that
the assignee and holder can txercise all
rights that the original payee would
haVe, txpressiy including the right to
demand and recover, as well as enforce
through a court action, the various
remedies.
New paragraph 6) of Civil Code
Section 1719 was added to state that the
Check -writer is liable for the treble
damages and cost if the payeelassigneel
holder comply with all the mquitements
of Civil Code Section 1719. For the bad
check service charge, it ntcalts that the
check has been dishonored. For the
treble damages, it means that the proper
notice was sent by certified mail, and
the 30 days expired. This section further
states that in no event shall the check -
writer be liable for more than one
service charge, treble damages or cost
for each check. This was to avoid a
situation where an original payee and a
subsequent holder assignee were both
demanding or intending to recover the
treble damages for a check period for
collection agencies. Your check assign-
ntent contract should clearly provide
that the check, including all rights and
any additional damages, scriices
charges, ctc., are covtred by the
assignment. This section also txpressly
states that the service charge and
subsequent treble damages are owed for
s.asa check.
(Continued)
New paragraph (k) of Civil Code
Section 1719 was added to make it clear
that the provisions for the bad check
service charge and treble'damages does
not prejudice the rights, claims, rern-
edits, and defenses of any of the
partners as provided in California law in
connection with enforcing payment of a
check. This section expressly provides
that the provisions of Civil Code
Section 1719 do not amend or override
-Ihe general law of negotiable instru-
ments. Division 3 of the California
Commercial Code, for the enforcement
of negotiable irirrumcrts, which
includes checks.
The passage of AB 2643 repre-
sents a successful simplification of
existing law to allow businesses to
easily allocate the cost of bad checks to
the person writing such checks. During
the legislative process, input from the
consumer community was solicited and
specific amendments made to the bill to
address consumer concerns. In adopting
this legislation, the Legislature has
you make better credit
decisions, and improve
fraud detection and
collection activities.
Because that's what
you asked for.
Today. every TRW credit report
includes up to two previous
addresses and up to one pre% ious
employment. And that makts sense
considering that more than 70 mil-
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past duce years. Armed with this
infotnm6on you can improve the
quality of %our credit decisions.
expedite collections, reduce the
nuittberof missing customers. and
impro%c credit fraud detection.
in today's economy. it's critic -,I to
minimize your risk while Brox, ing
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your business. That's why millions
of TRW rtpotzs now contain more
relevant information than aver
before. flus. a full 25Sc of our reports
have been improved through cn-
hanced duplicatt dettction of trade
lines and public record iterim
Consider these ^.-portant im-
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your suggestions 2n4 ideas are
being implemented -t TRW to ftclp
you make better credit -granting
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ITA. TKR -..vx.. l-A.47WA W.
M Jor d
®IIry
determined that any check service
charge up to S25.00 for the first dishon-
ored check is per -se reasonable. Further,
the Legislature has also recognized that
people who pass multiple bad checks to
a creditor are causing an even greater
economic burden to the business
community, and a higher bad check
service charge of 535.00 (which is
closer to the actual cost to the merchant
for a dishonored check) is reasonable.
This Bill has also included the
requirement that the check -writer pay
the bad check service charge in order to
avoid the treble damage liability. As
long recognized by the Legislature, bad
checks represent a significant economic
burden on the business community. This
occurs whether the check was dishon-
ored through inadvertence or through an
intentional act of the check -writer. The
inadvertent check -writer may promptly
resolve the matter by paying the amount
of the check and the check service
charge. However, the check-%vriter who
attempts to avoid paying the bad check
scrrcr, charge as authorized u;,d:c tins
section, will now face the liability for
treble damages upon expiration of the
30 -day notice. The days of writing a had
check and getting 60 days of float time
for making good with the merchant or
collection agency arc done, and in all
cases, the check -writer of a dishonored
check will pay at least the bad check
service charge.
if you are either collecting checks
or intend to get into the business, please
make sure you review these new
provisions carefully with your attorney.
Then make sure that you and the
merchant clients clearly understand the
bad check service ciurge that iitc
merchant wants to recover front the
check -writer. Make sure that all of your
collectors understand the basis of the
bad check service charge under Civil
Code Section 1719, that it has been
assigned over to the collection agency
from the merchant, and the collection
agency is now exercising all rigbts and
remedies to demand, recover or enforce
the soviet charge, damages and costs to
the same extent as the merchant.
Horen6e-1996 r Cotteetor's ink 29
Returned Check Cost
11
8/4/97
Time
Cost FINANCE - SUPPORT SERVICES
Time Cost
Activity
FINANCE - REVENUE
Working with bank copy of returned check,
Senior Account Clerk
access utility history to verify debit
Activity
hand write c; x 5 card documenting returned check
Total each check
5 minutes $1.45
Write account #, name of issuer
Enter to marl/merge document,
on bank slip for identification
date, account #, Name of issuer,
add $10.00 to check amount
addess, service address, $ amount of check
access computer for date credited
returned check service charge, due date
Total each check
5 minutes
$1.20 stuff letter
Access returned check register
Total each check
3 minutes $0.87
enter account #, date received at bank
check #, name of issuer, $ amount of check
Look up telephone number and call
dale entered into our books
repeat customer, discuss method
Fund numbers, comments
of payment and due date
Run computer list for Revenue Manager
Total each check
5 minutes $1.45
Total each check
5 minutes
$1.20 Access delinquent card file, staple
returned check card to any existing
Prepare entries to computer to reverse credits
delinquent card to avoid duplication
Prepare window receipt to reverse entries to books
Total each check
3 minutes $0.87
Total each check
3 minutes
$0.72 Sub Total
$4.64
Sub Total Office Staff
$25.36
FINANCE - FIELD SERVICES (if check is of redeemed by due date)
Make photocopies of check written to other
Review 3 x 5 card, enter date 48 hour notice
departments - non utility
issued, amount due & due date.
Prepare and send letter on current utility accounts
Write up 48 hour notice
Total each check
5 minutes
$1.20 Total each check
5 minutes $1.30
Physical delivery of 48 hour notice
Verify entries on cash report
Total each check
15 minute $3.90
Verify account #, $ amt, edit to window receipt
If not paid end to ready for turn off,requires physical
Page 1
Total each check .5 minutes
Prepare total monthlly list of returned checks to
forward to accounting for month end JV
to reverse entries to various funds and object codes
Total list 1 minute
Redeem returned check for customer
Access and update returned check register
Update utility account
Write window receipt to record
returned check charge revenue
Returned Check Cost
$1.20 movement around office to access for payment update
in computer and combined cash report, check for
guarantee, mark stree card indicating shut off,
make 2 photocopies of seal card, one for office staff,
one for electric utility staff and delivery to electric
$0.24 utility office.
Total each check 30 minute $9.60
Physical shut off (requires 2 persons)
Customer Service Supervisor 25 minute $5.00
Accounts Col ector 25 minute $6.50
If paid, Physical Turn on
Total each check 25 minute $6.50
Total each check 3 minutes $0.66 Continual Sliut Off Situation
Data entry end update list to include Issuer name, address,
FINANCE -ACCOUNTING account #, $ amount, meter information and
Account Clerk comments.
Activity Total each check 5 minutes $1.30
Prepare JV to record month end reversal entriec
Total list 45 minute $9.90 Physical cite visit to determine if service is still
sealed or customer moved
Check bank statement for returned checks Total each check 25 minute $6.50
to record returned check charges
Total bank statement 20 minute $4.40 Continual maintenance of shut off list to
determine credit and require deposit in future
Sub Total column $20.72 ".; : Total each check 5 minutes $1.30
Loss`if assigned for collection
Total each check $5.00
Sub total column $84.54
Grand Totaf $105.26
Page 2
RESOLUTION NO. 97-135
A RESOLUTION OF THE LODI CITY COUNCIL SETTING FEES FOR
CHECKS RETURNED FOR NON -SUFFICIENT FUNDS, ACCOUNT
CLOSED AND REFERRED TO MAKER
WHEREAS, Section 1719 of the Civil Code provides that damages equal to treble the
amount of a insufficient funds check could be enforced under specific circumstances; and
WHEREAS, returned checks made payable to the City of Lodi have increased over 100%
in a nine (9) year period; and
` WHEREAS, delinquent customers submitting checks drawn with non -sufficient funds
average 51 % of the total checks returned; and
WHEREAS, an analysis of cost incurred by office staff in an attempt to collect exceed
$25.00 for each check, and the total cost at over $100.00 if field personnel are necessary to force
collection; and
WHEREAS, on September 27, 1996, Governor Wilson signed into law AB 2643, effective
January 1, 1997, which provides that a check -writer of the dishonored check shall be liable to the
"payee" (person named on the check) for a service charge in an amount not to exceed $25.00 for
the first check dishonored, and an amount not to exceed $35.00 for each subsequent checks
dishonored.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council hereby sets the fee for
check rctumcd for non -sufficient funds, account closed, and reterred to maker at $10.00 for the
first check dishonored and $25.00 for each subsequent check dishonored.
BE IT FURTHER RESOLVED by the Lodi City Council that this Resolution become
effective immediately.
Dated: September 3, 1997
I hereby certify that Resolution No. 97-135 was passed and adopted by the City Council
of the City of Lodi in a regular meeting held September 3, 1997, by the following vote:
Ayes:
Council Members —
Noes:
Council Members —
Absent:
Council Members —
Abstain:
Council Members —
97-135
ALICE M. REIMCHE
City Clerk