Section 3-806 of the Illinois Uniform Commercial Code (UCC) provides that the person writing a check is “liable in the amount of $25, or for all costs and expenses, including reasonable attorney's fees, incurred by any person in connection with the collection of the amount for which the check or other draft was written, whichever is greater . . . .”  Since “all costs and expenses” may be difficult to quantify in many cases, the $25 returned check charge generally is a good standard to charge for a returned check involving a consumer account in Illinois. 

With respect to a revolving loan account, the Illinois Interest Act provides that dishonored check charges are “not . . . deemed to be charges for or in connection with any loan of money referred to in Section 6 of this Act, or charges by the lender as a consideration for the loan referred to in this Section . . . if the agreement governing the loan so provides.” Accordingly, for revolving consumer credit, we recommend that the revolving credit agreement state that your bank’s returned check fee will be assessed for returned check or dishonored items. 

As a reminder, the Illinois UCC does limit the returned check fee for commercial accounts to $4.50.

For resources related to our guidance, please see:

• Illinois UCC, 810 ILCS 5/3-806 (“Any person who issues a check or other draft that is not honored upon presentment because the drawer does not have an account with the drawee, or because the drawer does not have sufficient funds in his account, or because the drawer does not have sufficient credit with the drawee, shall be liable in the amount of $25, or for all costs and expenses, including reasonable attorney's fees, incurred by any person in connection with the collection of the amount for which the check or other draft was written, whichever is greater, and shall be liable for interest upon the amount of the check or other draft at the rate provided in subsection (1) of Section 4 of the Interest Act. Costs and expenses shall include reasonable costs and expenses incurred in the nonlitigated collection of the check or other draft.”)

• Illinois Interest Act, 815 ILCS 205/4.1a(e) (“Charges for and cost of the following items paid or incurred by any lender in connection with any loan shall not be deemed to be charges for or in connection with any loan of money referred to in Section 6 of this Act, or charges by the lender as a consideration for the loan referred to in this Section: . . . (e) if the agreement governing the loan so provides, a charge not to exceed the rate permitted under Section 3-806 of the Uniform Commercial Code-Commercial Paper for any check, draft or order for the payment of money submitted in accordance with said agreement which is unpaid or not honored by a bank or other depository institution.”)

• Illinois UCC, 810 ILCS 5/3-806 (“A fee or charge not to exceed $4.50 may be assessed to any person or owner of a commercial checking account or other similar commercial account where a check or other draft that is deposited into the account is dishonored upon presentment because of insufficient funds or because the drawer does not have an account with the drawee; provided, however, that, the limitation on the fee or charge specified in this paragraph does not apply to any fee or charge assessed to any bank or other depository institution or to any non-commercial checking account or other similar non-commercial account.”)