Legal Definitions - kiting

Kiting, also known as check-kiting, is a fraudulent practice where a person covers a bad check from one bank account to another. This is done by depositing a check from one account into another account, even though there are insufficient funds in the first account to cover the check. The deposited check increases the available funds in the second account, which can then be used to cover the bad check in the first account.

For example, let's say John has two bank accounts, Account A and Account B. John writes a check for $500 from Account A, even though there are only $100 in the account. He then deposits the $500 check into Account B, which now has a balance of $500. John can then use the $500 in Account B to cover the bad check in Account A.

Kiting is illegal and can result in criminal charges. To prevent kiting, many financial institutions have a waiting period before checks are deposited.

In the United States, kiting can violate the federal bank fraud statute if the victim is a federally insured financial institution. This means that if someone kites a check at a bank that is insured by the federal government, they could face federal charges.