Texas Hot Check Hustle

DMN has the story of a Wylie video store owner who has his customers arrested for late videos. This piece is sure to generate some outrage in the comments section. “You shouldn’t arrest someone for late DVDs!!!” etc. I’m not sure how arresting for late videos is any less repugnant that arresting college kids with joints, but I digress.

From DMN-

Bell went to a Collin County justice of the peace to file paperwork on dozens of his customers who were charged with theft of services.

The court issued arrest warrants for those who failed to pay up.

Some Video Hits customers paid fines of up to $870; others were arrested by the constable

The video rental vigilante is a high profile example of the merchant/law enforcement collections alliance. It’s also a good introduction into the Hot Check Hustle taking place across our state.

Texas law allows merchants to have customers arrested for bad checks. The police are human repo men, county jail is our debtors prison, and the DA is the BigDebt collection firm.

How do insufficient funds become “theft” cases? Two ways.

The first is when you write a check on a closed account. No complaints from me there, that’s fraud. Intent seems fairly obvious.

The second is where your checks bounces for insufficient funds. Intent seems to be lacking in this situation because it often is. How many of us have bounced a check? Were you intending to steal anything?

In our second scenario the merchant can mail you a letter with some magic language that demands payment. If you don’t pay within 10 days the law creates a presumption that you intended to defraud the merchant. That is, if you can’t pay a check within 10 days, or if you’ve moved and didn’t get the letter then you become a criminal and the State issues a warrant to force you to pay up. It’s a debtor’s prison in County Jail, and giant corporations have turned your local DA into a collection agency.

Presumptions of intent are fraught with peril. They allow the DA to file a case and issue a warrant without doing any investigation. The result is that merchants drop off stacks of checks with affidavits and the DA files a case or sends a demand letter. It’s law enforcement sans investigation. How do you think that turns out?

Like red light debt cameras this automated law enforcement system lacks the ability to distinguish the innocent (or indigent) from the criminal.

What’s wrong with arresting for bad checks?

First, it’s overkill. Checks over $20 are a class B misdemeanor. If you bounce a few $25 checks one month and can’t pay them you are looking a arrest, bail, and prosecution with a possible 180 days in jail and $2,000 fine on each case.

Second we are in a recession, checks bounce, merchants (like me) who accept checks should accept the risk of non payment and adjust their policies. I’ve not been paid for work done (eg DWI dismissed and the check bounced). It hurt, it sucked, and I adjusted my policies accordingly. If I’m going to take non cash items, I accept that there is a degree of risk involved.

There are options available for those who still choose to accept checks. I investigated one of those instant check verification systems a while ago. If we are going to allow arrest for bad checks, we should require the merchant to exercise some due diligence in accepting checks.

Finally, there is no protection for identify theft victims. I’ve seen scores of cases where a check book was stolen, or someones ID was used fraudulently. The result is that victim of ID theft gets arrested (sometimes out of State) and prosecuted for a checks they didn’t write. That’s what happens when you presume intent and conduct no investigation.

Many DA’s office will send a letter demanding payment prior to filing the case. This is all that stands between ID theft victims and wrongful arrest and prosecution. So check your mail.

Third, it’s not equitable. If non payment is going to be a crime that why not make DTPA (consumer protection) violations a crime also? If you paid your hard earned money for a car, and it turns out to be a lemon your remedy is a lawsuit. Why not create a presumption of fraud and have the dealer arrested instead?

I think civil courts are best equipped to handle non payment. We should save the theft designation for actual intent to steal, not invent intent where it doesn’t exist.

Did I mention DA across the State collect millions in hot check fees each year? The law creates a special hot check slush fund for DA’s to spend on salaries for other “expenses” (Xmas parties).

DAs (who duty is supposed to be justice, not collections) have assumed the role of big debt law collections firms. Instead of merely harassing you over the phone, they throw you in jail until you pay. It’s time to end the slush fund debtors prison injustice and only prosecute theft cases where there is actual evidence of theft.

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