Check kiting or cheque kiting is a form of check fraud. It involves taking advantage of the float to make use of non-existent funds in a checking or other bank account. If the account is not planned to be replenished, then the fraud is colloquially known as paper hanging.
About Check kiting in brief
Check kiting or cheque kiting is a form of check fraud, involving taking advantage of the float to make use of non-existent funds in a checking or other bank account. In this way, instead of being used as a negotiable instrument, checks are misused as form of unauthorized credit. If the account is not planned to be replenished, then the fraud is colloquially known as paper hanging. If writing a check with insufficient funds is done with the expectation they will be covered by payday it is called playing the float. In its simplest form, the kiter, who has two or more accounts at different banks, writes a check on day one to themselves from Bank A to Bank B, so funds become available that day at Bank B sufficient for all checks due to clear. On the following business day, theKiter writes a. check on their Bank B account to themselves and deposits it into his account at Bank A.
to provide artificial funds allowing the check they wrote. a day earlier to clear, and this cycle repeats until the offender is caught, or until. the offender deposits genuine funds, thereby eliminating the need to kite, and usually going unnoticed. Some kiting rings involve offenders posing as large businesses, thereby masking their activity as normal business transactions and making banks inclined to waive the limit of funds made available. Retail-based kiting involves the use of a party other than a bank to unknowingly provide temporary funds to an account holder lacking funds needed for check to clearing. Another version of scheme involves purchasing an item from a place of retail with a check and returning it promptly with a cash refund, followed by a cash deposit.