Announcing The Winner of Our Financial Literacy Scholarship (Spring 2022)
We are awarding $750 to a student every semester. All you have to do is show us how financial literacy has made a difference in your life.
Cheque kiting is an increasingly common type of financial scam where the scammer intentionally writes a cheque with a value greater than the account balance. In 2008, 60% of fraudulent financial losses involved cheques. It’s important to understand the different types of cheque fraud and how to protect yourself from cheque kiting.
Cheque kiting happens when someone writes a cheque from a bank account with insufficient funds to cover the cost of that cheque, deposits it into another bank account, and then withdraws the money.
Since cheques take time to clear, fraudsters get away with the money before the bank finds out that the bank account the cheque was written from has insufficient funds. The scammer gets away, and the bank has essentially given them free money.
Identifying the types of cheque kiting is the first step in protecting yourself against it. There are three kinds of cheque kiting:
A cheque is written from an account with insufficient funds. This cheque is then deposited at another bank, and the money is withdrawn immediately. The cheque at the first bank takes time to clear, so fraud isn’t detected until several days later.
Cheques are written from accounts with insufficient funds at multiple banks. A scammer writes a cheque from one bank and deposits it into an account at another bank. The second bank credits the account because it assumes the cheque is genuine. The amount of the cheque is then withdrawn and deposited at the first bank to cover the cheque as it was based on insufficient funds. Cheques are written between banks where the accounts have insufficient funds, but the banks continue to assume the cheques are genuine and credit the accounts. The cycle can continue until one or more banks realize it is a scam.
You got asked to connect your bank account — what does that mean?
This scam is most commonly seen online in marketplaces like Facebook Marketplace or Kijiji. Someone writes you a cheque for something they want to buy and asks you to wire transfer part of it back to them because the cheque is for an amount greater than the asking price. The cheque bounces and you are responsible for the entire amount of the bounced cheque. You also lose what you were selling.
There are several things you can do to protect yourself from cheque kiting:
Learn how to transfer money to a bank account.
If you’re a victim of cheque kiting or cheque fraud, contact the local police or the RCMP. You may also consider contacting the Financial Consumer Agency of Canada, the Canadian Anti-Fraud Centre. Although you may not get your money back, you can help to ensure that scammers will stop getting away with their crimes.
Cheque kiting is becoming increasingly common in the world of financial fraud. Knowing the different kinds of cheque kiting and how they work will help you to protect yourself against this scam. However, even the best of us still fall victim to scams sometimes. If you’ve been a victim of cheque kiting, there are several organizations you should contact. Overall, if you know the basics of cheque kiting and how to protect yourself, you should be able to protect yourself.
Rating of 5/5 based on 3 votes.
Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.
Whether you have good credit or poor credit, building financial awareness is the best way to save. Find tips, guides and tools to make better financial decisions.
We are awarding $750 to a student every semester. All you have to do is show us how financial literacy has made a difference in your life.
Almost $500 in commission-free trades. Code “50TRADESFREE”. Conditions apply.
Borrow $500-$50,000 from Fairstone by May 31 and don’t pay until July.
Build credit while spending money with the Refresh Financial VISA card.
With KOHO’s prepaid card you can build a better credit score for just $7/month.
Check out our interview with addy; a platform that allows Canadians to invest in different properties across Canada with as little as $1.
All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.
When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.
Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.