I've got a case where a fellow made a payment on his loan to the bank with a check that was returned stamped "Insufficient Funds." The bank sent him a cert. letter demanding he make good the check within 10 days, etc. and he blew them off.

Is a loan-payment a "payment for a service"?

What service would you say they rendered in reliance on that check? Sounds like the bank wants to imprison for debt to me. Oh yeah, I forgot, they did have to calculate the extra interest, that does sound like a "service".