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Check forgery, counterfeiting, and alteration are among the many different types of check fraud. In addition, check kiting is a type of fraud that involves “floating” a positive balance in one or more bank accounts. These acts are illegal in most places, and can result in fines, imprisonment, or both. In the end, however, the lost money and fees are often passed onto innocent people in the form of increased banking fees.
Whenever someone signs and uses a check without permission, it is forgery. This is true whether the check is from the person’s employer, friend, or family member. In some cases, the check is stolen from a stranger, and the person had no right to possess the document in the first place. Sometimes, this type of fraud is used in conjunction with a stolen or fake identification card to get the retailer or financial institution to accept it.
Counterfeiting is another type of check fraud, but it is more involved than forgery. To counterfeit a check, a person can either photocopy an existing check or use computer software to design a new check, and then use a high quality laser printer to print it. This may take a bit of skill and expensive electronics to successfully pull off.
Check alteration is very different from check counterfeiting, but it is similar to forgery in some ways. The writing on the check is altered using household chemicals to erase them, then rewritten to be cashed to the alterer or retailer. Some check alterers only erase the “pay to” portion of the check, while others go as far as to increase the amount of the check. For example, in one case, a check was altered to be worth $24,000 US Dollars (USD) rather than the original $240 USD.
Another type of check fraud is called check kiting or check floating, which is complicated compared to other methods. Basically, a person opens two bank accounts and writes a check to one. It can take weeks for a bank to process that check and realize the other account does not have sufficient funds. Before an overdraw happens, the person usually writes another check to the other bank account to cover the non-existent funds in the first account. In many cases, the person eventually deposits enough money to cover the balance rather than keeping both accounts afloat.