Check kiting

[3] If writing a check with insufficient funds is done with the expectation they will be covered by payday it is called playing the float.

It has also been used by those who have some genuine funds in interest-bearing accounts, but who artificially inflate their balances to increase the interest paid by their banks.

In these cases, the kiter writes checks to one or more places of retail (usually supermarkets) that offer cash back in addition to the amount of a purchase as a courtesy to their patrons.

Retail kiting is more common in suburban areas, where multiple supermarket chains exist within proximity.

While it is more difficult to detect and prosecute, it involves lesser amounts of cash than circular kiting, and therefore is a lower threat.

While limits are often placed on an individual as to how much money can be deposited without a temporary hold, corporations may be granted immediate access to funds, which can make the scheme go unnoticed.

According to the United States Department of Justice, check kiting can be prosecuted under several existing laws including those against bank fraud (18 U.S.C.

It can draw a fine of up to $1,000,000.00, imprisonment for up to 30 years, or both, and many first-time offenders with no criminal background have received stiff sentences.

[10] Some states protect the careless by making the intent to defraud an element of the crime, or exempting from punishment those that pay the check later.