State Supreme Court Rules in Favor of Electronic Fees in Bad Check Collection

By Dale Wetzel, Associated Press

State law allows a debt collector to electronically snatch a $25 bad-check penalty fee from a person’s bank account without permission, the North Dakota Supreme Court says.

Its decision Wednesday overruled the state Department of Financial Institutions, which contended CybrCollect Inc. of La Crosse, Wis., needed a customer’s consent to electronically deduct the fee from his or her account.

Tim Karsky, the agency’s commissioner, ordered CybrCollect to halt the practice two years ago. When the company obtained a state collection license in April 2003, CybrCollect agreed not to deduct penalty fees for bad checks electronically unless the debtor agreed, court records say.

An administrative law judge, Allen Hoberg, and South Central District Judge Gail Hagerty ruled earlier in the company’s favor. On Wednesday, the Supreme Court upheld Hagerty’s decision, including in her ruling that the Department of Financial Institutions should pay $56,313 toward CybrCollect’s legal fees and costs.

“The plain language of the (state law) cannot be read to prohibit a holder of a (nonsufficient funds) check from electronically debiting collection fees without a written authorization from the check writer,” the court’s ruling says.

For this complete story, please visit Court says company’s electronic debits for bad checks is legal.