Check Kiting

A form of bank fraud in which a person exploits the time delay, or float, between when a check is deposited and when it actually clears and is paid by the bank it is drawn on, by writing a check from an account with insufficient funds against a second account and then covering that shortfall by writing another check from the second account back to the first, cycling funds between two or more accounts to create an artificially inflated available balance that does not actually exist. The scheme takes its name from the same use of kite, meaning something that flies without real support underneath it, historically applied to a fraudulent bill of exchange in earlier financial fraud. Check kiting in the United States was significantly curtailed by the Expedited Funds Availability Act of 1987, which shortened the check-clearing hold periods banks are required to observe, reducing the float window an offender can exploit, though check kiting remains a documented and prosecutable form of bank fraud, particularly across accounts held at different banks.