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What are different forms of check fraud?

On Behalf of | Jun 15, 2022 | White collar criminal defense

An allegation that you have engaged in check fraud could do serious damage to your reputation, possibly costing you your job and even your freedom if a court convicts you of this crime. Knowing how people commit check fraud may help you to avoid the appearance of committing illegal acts.

You might make a transaction through other means than using a check, but this may not always be possible. If you or the business you work for must use checks, The Motley Fool describes some of the more common types of check fraud to look out for.

Using counterfeit checks

The sophistication of commercially available printers means fraudsters can create checks that look almost exactly like the real thing. Still, sometimes a counterfeit check will give itself away by showing a shoddy print job or it will lack information like a bank name. Also, legitimate checks tend to have a perforated edge showing it came off a checkbook, whereas a counterfeit check will often have clean edges on all sides.

Using stolen checks

Sometimes fraudsters can get a hold of real company checks and use them to make purchases. People who embezzle from a business sometimes steal blank checks from an accounting department. A company can also lose checks because of a robbery. Notifying a bank at the earliest moment is important since banks can reverse deposits made on stolen checks.

Engaging in check kiting

Banks, financial institutions and some businesses become victims of check kiting. Fraudsters engage in this practice by creating accounts at different banks and floating checks between the accounts even though the accounts lack money to cover the checks. It is possible for a check kiter to defraud a financial institution of thousands of dollars.

Sometimes people engage in check kiting not intending to break the law. They write a check for money they do not have, knowing they will receive a payment to fund the check in the next day or so. However, the law can still look at this as an illegal activity. It is better not to take a chance and risk federal investigators paying you a visit.