How To Prove Check Kiting

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When you write a check, it typically takes a couple of days for the payment to clear — in the banking world, this is called the “float” period. You might’ve written a check at some point knowing there wasn’t enough money in your checking account to hide it at that moment, but that extra money would be deposited within the account before the check cleared. For instance, you would possibly write a check the day before payday. However, with check kiting, someone uses 2 checking account s to write down a check from one bank account to the opposite, then takes the cash before the check clears. Although banks can lose many dollars in check-kiting schemes, individuals and small-business owners also can fall victim.

Table of Contents

Identifying a Check Kiting Scheme

Look at the deposit pattern over the last 3 months. If someone is involved during a check-kiting scheme, they’re likely to possess multiple deposits from an equivalent checking account. Sometimes, you’ll see multiple checks from an equivalent payer on an equivalent day. This is often a red flag that possibly indicates check kiting.

Check kiting usually involves unusual patterns of payment and withdrawal. Separate the pattern with possible excuses for the pattern. For instance, the person may say that they need multiple payments from an equivalent person because that person is paying them back for something. However, it’s unlikely that somebody will write multiple checks during a day – they’re going to simply write one.

Mixed transactions, where the person deposits a check and withdraws the deposited amount in cash, also can be a sign of check keying, especially if they occur frequently.

Track owners of accounts that are credited frequently

Typically, a check cater either has ultimate control or has access to all or any accounts getting used during a check-kiting scheme. If the check caters are using peers to run other accounts, they’re likely to be connected in how.

  • For example, a check catcher may have an account for his or her spouse or a loved one to use within the plan. The opposite person might not even remember that the check kilter plans to use the account for fraudulent purposes.

If a check account has access to a business account, they will use the business account in their check-kiting scheme without the knowledge of the business owners.

Demonstrating Fraudulent Intent

Show consistency within the pattern of check-writing. It’d not be all that unusual for somebody to possess multiple checks from an equivalent person, or maybe use multiple checks between two accounts that they own to transfer funds. However, if those checks are routinely returned for insufficient funds, continuing to require checks from an equivalent source can show an intent to defraud the bank.

  • If a reputable person receives a make sure is returned for insufficient funds, they might be unlikely to require another check from an equivalent check writer again. Instead, they might require a safer sort of payment.
  • Check out the dates the checks are written to determine the check writer’s knowledge of float times. If the checks are routinely written every two or three days, it shows that they are conscious of how long it takes a check to clear and are using bad checks to fraudulently inflate the balances of the accounts.

Preventing Check Kiting

Accept check payments just for the precise amount owed. If you sell items or services, a customer might offer to write down you a check for quite the quantity they owe, then ask you to offer them cash for the difference. However, if you are doing this then the check is returned by the bank, you’ll become an unwitting participant during a check-kiting scheme.

  • In online transactions, a check kite might send you payment, then send a message informing you that they “accidentally” paid you an excessive amount of. Typically, they’ll invite you to pay the difference by wiring them cash or buying a present card, instead of simply accepting a refund.

Tips

  • Since check kiting may be a criminal offense, it typically falls on government prosecutors to prove the weather of the crime. However, if you’re a victim, you’ll assist prosecutors by maintaining good records of any transactions you think are fraudulent.
  • If you think a check-kiting scheme, contact local enforcement as soon as possible.
How To Prove Check Kiting

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