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Ciattarelli-Schaer Electronic Funds Transfer Bill Approved by Assembly

Bipartisan legislation that clarifies electronic funds transfers (EFTs) fall within the criminal statute concerning the issuing of bad checks was approved by the General Assembly today.

The legislation, A-4006, is sponsored by Assembly Republican Jack Ciattarelli and Assembly Democrat Gary Schaer, chairman of the Financial Institutions and Insurance panel. Under current law, a person is guilty of such a crime when he/she knowingly authorizes a check or money order that will not be honored by the financial institution on which the order for payment is drawn. As EFTs, which are also legally binding financial arrangements, have become a more and more common method of payment between parties, there is no law specific to authorizing a transfer that cannot be honored.

“New Jersey’s implementation of modern day technologies for financial transactions such as taxpayer reporting and payment is a very positive development,” said Ciattarelli, R-Somerset, Hunterdon, Mercer and Middlesex. “That development, however, requires us to modernize our statutes, which were originally written for a paper system. Modernizing the current statute to include the electronic transfer of funds goes a long way towards keeping our laws current with new technological reporting and payment systems.”

Ciattarelli and Schaer noted the bill will be of particular help to the state’s Division of Taxation when dealing with taxpayers who make insufficient fund payments via an electronic funds transfer. The division has the option to invoke criminal sanctions when a written “bad” check is presented, but there is no current parallel authority with respect to electronic transfers, which have become the primary means of payment.

“Everyone understands that knowingly passing a bad check is a crime, so let’s make sure our laws catch up with the times by also making clear that authorizing an electronic money transfer knowing it cannot be honored is considered just as much a violation,” said Schaer, D-Passaic and Bergen. “This is, quite simply, a common sense modernization of our laws. It will protect businesses, residents and our economy alike by ensuring no one can try to take advantage of outdated money transfer statutes.”

Electronic funds transfers would be included under the law that covers insufficient funds for checks or money orders and imposes the following penalties on the guilty party:

  • a second degree crime if the amount is $75,000 or more;
  • a third degree crime if the amount is $1,000.00 or more but less than $75,000;
  • a crime of the fourth degree if the amount is $200.00 or more but less than $1,000; and
  • a disorderly persons offense if the amount of the check is less than $200.

The bill was released with unanimous approval by the Assembly Financial Institutions and Insurance Committee on June 6.