How does the Federal Government Combats Check Fraud?

Writing a check for a particular amount which the account holder knows is not the amount or not sufficient to amount in the account is considered a violation of a criminal law under any jurisdiction. Nevertheless, it has been a practice for some financial institution to avoid putting the client in trial by overriding the insufficiency. In return, the bank charges a subsequent fee for this kind of circumstances.

Bank has always had different schemes to detect these circumstances and stop them before the transaction gets complete. This is to protect their client against any legal charges that the receiver of the check may file against. Intelligent electronic systems will notify the bank servicer in case a client is engaging in various fraudulent activities, which include depositing check which has the same huge whole deposits along with a near-zero average daily balance.

Innovative technologies are in place today which are fraudulently use for check kiting. To prevent this, financial institutions are in parallel innovative to swiftly seize this illegal transactions at the teller or branch level before it even reaches the bank office. This illegal transaction is easier to detect at the teller level thus preventing customers to even start the transaction. It has to be noted though that this schemes are also a way to protect the clients against any possible legal action they may face.

These bank’s schemes have innovative processes, circular and abandonment frauds are progressively being eradicated since checks will be clear in Bank B on the day the check is put into Bank A which makes withdrawing non-existing amount become accessible for withdrawal. With this kind of technology, the funds that seemed to be present in Bank A will gradually be wiped out on that same day preventing the transaction to go through.

Most businesses are wise enough to use the check sternly as an informational device to be allowed access in debiting funds from the account prior to delivering the item to the customer.  In the United States, This is made possible through the Automated Clearing House (ACH); though this institution is faster than the conventional check clearing, ACH is not instantaneous as what general public thinks. Positively, this practice has proven its worth by reducing the possibility of kiting though it had not fully eliminate it.

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