It is well within the norms of checking accounts for them to become overdrawn as e.g. users miscalculate the amount of money they have on deposit, timing issues with the posting of checks break in ways that are not perfectly predictable in advance, and users make mistakes. This is something that product managers at banks design into the unit economics of checking account. NSF (insufficient funds) fees were for at least two decades or so an important part of the revenue mix.
We arrested and jailed, and continue to arrest and jail, at least some people for something which looks very, very similar to what earns other people a $30 NSF fee. (And, of course, if you’re a desirable banking customer, they’ll waive that fee because the waiver is simply good business.) In theory, uttering is distinguished from simple overdrafting by there being an element of intent to defraud. In practice, uttering is when you’re a poor person using a checking account and a string of people reviewing your behavior view it unsympathetically. If a grocery store loss prevention employee, a police officer, and a prosecutor each refuse to stop the process, NSF means you’re Now Somebody's Felon.
Sometimes your behavior will look unsympathetic because you are a poor person. Sometimes your behavior will look unsympathetic because you definitely were trying to pull one over on the grocery store. Sometimes your behavior will look unsympathetic because you have done this many, many times before. Sometimes these are all the same picture.
Phrased that way, it sounds almost fantastically unjust. And… it’s complicated. Many people, of all social classes, consumed many chickens obtained on credit because certain specially-formatted pieces of paper were believed to be money. That belief relied, in material part, on a state guarantee that they were money. That guarantee was backed by the state expressing substantial displeasure about the abuse of certain specially-formatted pieces of paper.
And from this follows an underappreciated consequence of modern financial infrastructure: credit cards and debit transactions make the economy more efficient. One way you can measure that efficiency gain is that their users rarely go to jail. Partly that is because you can do a near real-time prediction of whether the transaction has good funds behind it at the point-of-sale. Partly it is because we more fully move credit risk from the grocery store to the bank.
Society frequently considers the sophistication of different participants in determining their level of legal recourse. We consider grocery stores presumptively worthy of a relatively high degree of protection; we will jail someone over $20 of chicken. We consider banks usually capable of doing their own risk analyses, and if they make an underwriting decision that costs them $2,000, well, society assumes banks have people who are good at math. Part of that math is “credit card issuance is fantastically lucrative, in part because you can charge the grocery store when it sells chicken to someone using a credit card.” And so part of the cost of accepting credit cards is the cash rewards, part is for computers, and part pays for “not jailing poor people.”
From the article: