What is Check Kiting?
This refers to the purposeful issuance of a check with an amount that is inadequate to settle the designated amount. Some of the mechanisms of this fraud strategy include:
- Issuing a check for which there isn’t enough money in the account of the payer.
- Depositing the forged check in a checking account that was recently opened.
- Opening a checking account at a different bank or financial institution.
- Withdraw the money from the new checking account.
The entity victimized by check kiting is the financial institution that has granted funds to be withdrawn from the new checking account without verifying a certain amount of money from the paying bank.
Financial institutions solve this concern by not permitting funds to be withdrawn from the account until a specific time period has passed. There are several indicators of kiting:
- A number of checks are drawn on the same financial institution
- A considerable number of check deposits per day
- Deposits are being made through several bank branches. This is to make the volume of deposits less evident to bank personnel.
- A huge amount of money is in an account that hasn’t cleared the paying financial institution
Fundamentally, this kind of fraud is intentional. Anyone involved in check kiting generally has a vast understanding of the length of time it takes for checks to clear. Individuals engaged in this fraudulent act will exploit the timing delay to withdraw money before the financial institution becomes aware of a dispute. An expert check kiting strategy can lead to losses of millions of dollars.
Last updated: September 2025