It’s imperative that people only write checks if they have the funds in the bank to cover the check. Some people try to get around the system by floating checks. While it might seem like it is a clever way to get the money they need, it’s a form of fraud that’s illegal.
Check kiting essentially turns a bad check into a form of credit, but this isn’t authorized and it can lead to trouble for banks. A person who’s caught doing this can face criminal charges and civil charges.
How does check kiting work?
There are different forms of check kiting that all work a little differently.
- Endless kiting: This form uses illegally printed checks that have a routing number that doesn’t match the bank’s name on the check. The two banks will send the check back and forth for a seemingly endless cycle, but the original deposit amount is credited to the deposit account.
- Circular kiting: This form creates a circle of checks in which one person writes checks to themselves and deposits into their own account at a different bank. They go back and forth between their own accounts with checks, but they’re just creating a fraudulent balance that they’re drawing off of.
- Corporate kiting: This involves large sums of money usually using business accounts that don’t have immediate deposit credit limits.
- Retail kiting: This means a person gets cash back from a check transaction at a store, but the funds to cover that aren’t in the account. They will write a check from another account that doesn’t actually have money to cover the check written to the store.
Anyone who’s been accused of check kiting should understand that these are serious charges. Learning more about your defense options can help you be more effective in your own defense.