Banking

What Happens If I Deposit a Bad Check into My Account | Expert Guide

A bounced check happens when the check writer’s account does not have enough funds to cover the check’s amount, resulting in the check being returned to them. Bounced checks are inconvenient, but they aren’t necessarily indicative of shady dealings or missing funds. When you face a faulty check, whether you’re the one writing it or the one receiving it, there are actions you may do. Now the question arises what happens if I deposit a bad check into my account?

The consequences of depositing a bad check can be costly. You may have to repay the entire amount of your fraudulent checks, and that’s not all! A criminal record might also await you in this situation. Bank policies vary when it comes to reimbursement for fraudulently deposited or cashed checks.

Some state laws prevent banks from charging customers who unknowingly deposit bad funds into their accounts while others make them responsible. Regardless if they knew about the money being counterfeit states are different because many say that as long as you report any questionable transaction within thirty days then you’re of good with no penalty. But there is always room for error so watch out before banking on it just yet.

Paying payments, making purchases, and receiving deposits are all made easier with a checking account. The account holder is liable for the account, particularly when it comes to checks. If someone has deposited a bad check into your account, you should know the possible ramifications to you and your budget

More resource: Advantage of Checking Accounts.

You’re responsible for any bad checks you deposit. You are in charge of the checks you deposit. And if they’re wrong, you’ll be liable for reimbursing the bank for whatever money you’ve taken out. It is not gift cards. This is serious!

Use Checks Wisely

What Happens If I Deposit a Bad Check into My Account

If you give someone permission to lodge a check in your account, you are responsible for whatever happens to that check. A bad check bounces when there isn’t enough money in the account where the check was written or cancelled. Bad checks that have not been paid are returned to your bank. Your institution will charge you a fee for this returned item. This cost varies depending on the bank.

Regardless of how banks operate, federal law mandates that funds from different check deposits be available in a single business day. Technically, banks may honour checks regardless of whether or not there is enough money to pay them.

Essential things to know when Cashing Old Checks

What Happens If I Deposit a Bad Check into My Account

Although some banks and credit unions are faster than others, most checks pass within two business days (jump to a list of banks that clear checks fast). The first $200 of a check is usually accessible the next business day after the bank receives it. The amount of time that a check takes to clear is determined by the size of the check if your account is in good standing, and how long you’ve been a bank client.

Some banks and credit unions offer funds faster than the industry standard of two days. The time the check clears is determined by the check and the bank account’s condition. However, it usually takes days, not minutes.

Direct deposits, wire transfers, and peer-to-peer transactions are all speedier options. If you’re anticipating a substantial sum, request a direct deposit or transfer the cash from the payer. You might alternatively request that the payer use a mobile check deposit payment app to transfer your money. Transactions are low-cost and quick, and there’s no need for a pen and paper, unlike checks.

Consequences of a Bad Check

If the deposited check were not the product of fake check frauds, the bank would ask you to pay any fees or overdraft charges incurred due to the check on your account. If the fees result in a negative balance on your account, and you do not pay it, the bank may shut your account and report you to ChexSystems.

ChexSystems is a financial credit bureau that keeps track of those who have messed up their bank accounts. Banks use it when they open new accounts. A ChexSystems entry can stay on your record for up to five years, and most financial institutions will refuse to create a new checking account if you have a ChexSystems entry.

For starters, don’t be alarmed. There’s a chance the faulty check was made in error, especially if they are personal checks from someone you know.

Even if you are not at fault, you may be charged a returned deposit item cost for a rejected check. Furthermore, if you thought the funds were already yours, you risk incurring NSF or overdraft fees for attempting to utilize funds that aren’t yet in your account.

What to do if you’ve been a Victim of Check Fraud?

What Happens If I Deposit a Bad Check into My Account

If you feel you have been a victim of check fraud, there are many things you should take right away to protect yourself from legal concerns, minimize your losses, and aid law authorities in pursuing the perpetrators.

Obtain critical information as soon as possible.

To process, prevent, and punish, your bank, police, and credit bureaus will require precise information. The check number(s), where and when the check was utilized, the dollar amount the check was written for and the check receiver are all examples of this information (s).

  • Notify your bank or credit union immediately.
  • Your bank will alter your account number, maybe shut and reopen an account for you, and issue new checks. All checks from the hacked account will be tagged as FORGERIES, making it less likely for merchants to accept them and, if they do, to turn them over to collection agencies for money owing on the bad checks.
  • Your State’s Attorney General’s Office should be contacted.
  • For contact information, go to the website of the National Association of Attorneys General.
  • Your city’s District Attorney’s Office should be contacted. Financial Crimes Units are standard in sizeable metropolitan police agencies.

NSF Check: When A Check You Wrote (Or Received) Bounces

“Bounced” or “bad” checks are other terms for NSF checks. If a bank receives a check written on an account with inadequate funds, it refuses to cash it and charges the account owner an NSF fee. The store may also charge a fee or penalty for the return.

Banks frequently levy NSF fees when a presented check is returned due to a lack of money to cover it. When accepting payments from accounts with insufficient balances, a comparable fee may be charged. The latter situation depicts an account overdraft (OD), which is sometimes misunderstood as nonsufficient money and used interchangeably.

Consumers and banks are at odds over the fees that many banks impose for NSF checks. Customers are effectively paying excessively high-interest rates for relatively small deficits in their accounts, according to consumer activists, because fees are generally a set amount.

In the United States, the average NSF cost is between $27 and $39. Many of them are under $30. To avoid the penalties connected with an insufficient funds transaction, banks provide account holders with numerous choices. You can opt out of some overdraft policies that allow the bank to reimburse expenses and levy an NSF fee if you don’t use them.

Maximum Returned Check Fees by State

  • Alabama $30
  • Montana $30
  • Alaska $30
  • Nebraska $25
  • Arizona $25
  • Nevada $25
  • Arkansas $30
  • New Hampshire $25
  • California $25
  • New Jersey $25
  • Colorado $20
  • New Mexico $30
  • Connecticut $20
  • New York $20
  • Delaware $40
  • North Carolina $25
  • District Of Columbia $25
  • North Dakota $40
  • Florida $25 is amount is < or = $50 Ohio $30 or 10% of check amount, whichever is greater
  • $30 if amount is < or = $300
  • $40 if amount is < or = $800 -or- 5% of check amount if > $800
  • Georgia $30 if amount is < or = $600 5% of check amount if > $600 Oklahoma $25
  • Hawaii $30 Oregon $25
  • Idaho $20 or amount of check, whichever is less Pennsylvania $25
  • Illinois $25
  • Puerto Rico $10
  • Indiana $25
  • Rhode Island $25
  • Iowa $30
  • South Carolina $30
  • Kansas $30
  • South Dakota $40
  • Kentucky $25
  • Tennessee $30
  • Louisiana $25 or 5% of the check amount, whichever is greater Texas $30
  • Maine $25
  • Utah $20
  • Maryland $35
  • Vermont $25
  • Massachusetts $25
  • Virginia $50
  • Michigan $25
  • Washington Lesser of $40 or face amount of check
  • Minnesota $30
  • West Virginia $25
  • Mississippi $40
  • Wisconsin $25
  • Missouri $25
  • Wyoming $30

Tips on How to Avoid or Deal with Bounced Checks

As a writer of checks

Keep an eye on the balance of your account.

You may check your account balance at any time if you have your bank’s mobile deposit app (if it offers one). You may then double-check that you have enough money in your account before writing a check.

Create and stick to a budget. When you’re spending like crazy, keeping an eye on your balance isn’t always enough. Create and stick to a budget to prevent overspending and maybe not having enough money in your account when it’s needed.

Consider overdraft protection.

Overdraft protection allows you to avoid an NSF fee by getting the bank to cover the expense of purchase or, in this case, the check amount. Instead, you’ll most likely be charged an overdraft fee. Another approach to avoid paying an overdraft fee is to connect your checking and savings accounts so that if you overdraw your checking account, the bank will use cash from your savings account to cover the difference. However, banks may charge a fee for this service.

As the receiver of the check

Check to see if the check is valid.

Before you attempt to deposit the check, double-check that it is genuine, especially if you are unfamiliar with the check writer. Look for watermarks and a legitimate routing number. Consider joining up for an online check-verification service if you get checks frequently.

Charge a charge if a check bounces.

Consider collecting fees when clients bounce checks if you own a business. This should presumably dissuade anyone from taking a chance on a bad check.

Accepting checks is not an option.

Instead, request a money order or a cashier’s check, which ensures that the funds are attached to the check. Of course, you may also request cash or an internet transfer.

Everything You Need to Know About Writing Bad Checks

Everything You Need to Know About Writing Bad Checks

It is illegal to write bad checks. The penalties for those who write checks knowing they don’t have enough money in their accounts differ by state. Some states demand that you have the intent to defraud.

However, in the vast majority of states, the offence is classified as a misdemeanour. The offence may be punished as a felony if the check amount exceeds specific limits.

In all circumstances, civil penalties apply, with a typical penalty sum equal to the check’s face value, a multiple of the check amount with a maximum, or the check amount plus court and attorney expenses being the most frequent.

If you suspect a check you’ve written isn’t going to clear, talk to the payee about putting the deposit on hold until a later date. It may not be very respectful, but you’ll be better off in the long run. It’s preferable to be proactive and postpone the check’s cashing than to risk incurring costs from both your bank and the payee.

For several weeks, you may not even realize you’ve received a bad check—at least until the bank tells you or you check your account. When a check fails, the bank will deduct the amount of the bounced check from your account, leaving you with a debit for the same amount as the original check. If you’ve spent the money, you’ll almost certainly be in debt.

Writing Bad Checks Can Land You in Collections

Adding overdraft protection to your account will help you avoid overspending and rejected checks. If you get a bounced check, get in touch with the person who wrote it to find out why it was returned.

It’s okay to make a check by mistake now and again, but make sure it’s not a habit because signing faulty checks on purpose is against the law. If you mistakenly write a bad check, notify the receiver and your bank right away to pay any fines incurred due to the bad check and the amount you owe.

People who are simply ignorant that their bank balances are too low sometimes write bad checks unwittingly. Bounced checks are regularly charged fees by banks and merchants, which can sometimes surpass the amount for which the check was written. 

The bank will usually charge you a nonsufficient funds (NSF) fee, which may be as much as $35 for every faulty check made. You might also be held liable for any fees incurred by the payee as a result of your bad check. This affects your credit score.

Don’t bank on a “cleared” check.

Scammers use what we don’t know about how banks manage check deposits to perpetuate fake check schemes. Scammers are aware of this, and they use it to deceive victims into sending money to them before the bank notices the phoney.

Read More: How to Send Money Anonymously Western Union.

According to the FTC’s Consumer Sentinel Network database, more than 27,000 consumers reported fraudulent check frauds in 2019, with losses totalling more than 28 million dollars.

These schemes work because you can rapidly see the cash in your account after depositing a check. It, therefore, seems risk-free to part with some of that money. Scammers are aware that while the law requires banks to make monies from deposited checks available within a day or two, uncovering a fake might take weeks.

Fake checks resulted in a median individual loss of $1,988, compared to $320 for all fraud types combined. People further noted that the fraudsters frequently requested payment by gift card or wire transfer. Con performers choose these payment methods since it is nearly hard to trace or reverse the money after receiving it.

Frequently Asked Questions

Can you go to jail for depositing a bad check?

According to federal rules, it is illegal to deposit a bogus check to obtain the money that is not yours. You might face jail time or penalties, just like any other type of fraud. Misdemeanour check fraud charges typically result in a fine, and felony check fraud charges usually end in jail time.

Can you take back a deposited check?

If you deposit a certified check, a check from another account at your bank or credit union, or a government checks in person to a bank employee, you can withdraw or spend the entire amount on the next working day.

What transpires if you load a forged check by accident?

When you lodge a bogus check, the bank may take weeks to realize it’s a fabrication. Even if you were not conscious that the check was incorrect, the check would bounce if it is delivered unpaid, which implies it cannot be processed. You’ll very definitely have to reimburse the bank for the forged check’s value.

What happens if you deposit a bad check that you did not write?

Regardless of whether you sign or collect a failed check, also termed as a nonsufficient fund, or NSF, check, it may cost you money. If you obtain and deposit a failed check, you’ll be charged a fee by your bank, adding to the stress of trying to recover the money you’re due.

Is the bank responsible for cashing a fake check?

Certainly not! If a check is determined to be fraudulent, your bank can usually reverse the amounts deposited to your account. Check your deposit account agreement for details on the bank’s policy on counterfeit checks. Overpayment/money fake check scams may include fraudulent statements.

Can a fake check be clear?

Some con artists even advise waiting for the check to “clear” before sending money. The bank can take the amount of the fraudulent check back if it bounces, leaving you responsible for the money.

How do you process a bad check and escape with it?

If the tellers at the bank inform you that you have enough money, you have three choices: Cash the check right away (it’s probably not a good idea if it’s many thousand dollars), then take it to your bank and deposit the monies (this will take 2-3 days for the check to clear – not recommend).

Can a bank tell if a check is forged?

Customers are usually entitled to reimbursement from banks for fraudulent checks. However, depending on the circumstances, a bank may check to see if the consumer is eligible for a refund.

Bottom Line

It’s usually a positive sign when you deposit a check, and the money appears in your account. But it’s crucial to know what it means—and doesn’t mean. Checks may be complicated and vulnerable to fraud, so just because your balance rises doesn’t imply the money. The consequences might be a pricey lesson on the dangers of accepting checks as payment.

When in doubt, contact the bank on which the check is written to see if you can obtain any information on the check and inquire whether it has cleared. Don’t phone the number on a check since it might be a scammer’s number. Instead, go to the bank’s official website and seek the phone number.