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Check Kiting

January 24th, 2010

Check kiting is a form of fraud where checks are bounced between 2 checking accounts. A check is written from the criminal’s checkbook from one bank and deposited into a second bank. The funds then show up in the second bank and withdrawn and deposited back into the first bank before the written check can bounce.

check kitingCheck kiting is sometimes used to move money around different banks in order to stall for time before they deposit funds into their checking account. This is known as circular check kiting. Circular check kiting depends on hang time between a bank crediting and processing a check. Fraudulent banking members are reported to the ChexSystems database so they can’t open new accounts at other banks.

Some people depend on this float time, also known as availability float and write checks that they don’t have the funds for in anticipation of putting money into their account before the check they wrote is processed. This is not a good idea. Most check kiters don’t stop check kiting and are eventually caught.

Check kiting has become outdated due to new electronic banking systems that credit and process checks at the same time. This has effectively eliminated the float time between banks.

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