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Money & Banking

Bank, Check & Payment Fraud

Fraud against the payment system itself: counterfeit and altered checks, check kiting, forged endorsements, and unauthorized electronic debits. It exploits the gap between when funds are credited and when they are actually collected.

01 — How it works

  1. 01

    Create

    Print counterfeit checks or alter a real one.

  2. 02

    Deposit

    Cash or deposit the item, exploiting the float.

  3. 03

    Withdraw

    Pull funds before the check is returned unpaid.

  4. 04

    Repeat

    Move to new accounts and victims as detection catches up.

02 — Lifecycle

From first contact to detection.

  1. Deposited

    A counterfeit or altered item enters the bank.

  2. Provisionally credited

    Funds appear available during the float.

  3. Withdrawn

    The fraudster pulls cash before collection.

  4. Returned

    The check bounces and the loss lands.

03 — Common variants

  • Counterfeit checks
  • Check kiting
  • Forged endorsement
  • Washed checks

04 — Statutes & penalties

18 U.S.C. § 1344 (Bank Fraud), § 1341 (Mail Fraud), § 513 (Forged Securities)

Up to 20–30 years per count for bank fraud; sentences scale with the loss amount and number of victims.

05 — How people are drawn in

Organized rings recruit 'check cashiers' through social media, offering a cut to deposit a check and forward the funds.

06 — Examples

  • Counterfeit business checks mailed to phishing-list victims and deposited by mobile app.
  • Check kiting across accounts to manufacture a false balance.
  • Forged endorsements and washed checks passed at retailers.