Check kiting is an idiom primarily used in North America. An idiom is a word, group of words or phrase that has a figurative meaning that is not easily deduced from its literal meaning. We will examine the definition of the term check kiting, where it came from and some examples of its use in sentences.
Check kiting is the practice of writing a check on an account with insufficient funds and relying on the lag time between writing a check and the depositing of that check by the recipient. In the interim, the writer of the check deposits money in the account so that it is available when the recipient gets to the bank. There are many, more complicated versions of check kiting. Check kiting is fraud. With the advent of electronic banking, check kiting has become less prevalent. The term check kiting comes from a nineteenth century practice of issuing bonds and IOUs with no collateral, known as flying a kite. The idea is that these notes have nothing to support them other than air. The term check kiting came into use in the 1920s. When used as an adjective before a noun, the term is hyphenated, as in check-kiting.
A summary includes: He lost at least $24 million in a Ponzi-like scheme; Regions Bank accused him of orchestrating a $10 million check-kiting scheme and assisting in the larger fraud; he had to sell off assets to pay $1.5 million in legal fees; and he was turned into a financial pariah in Sarasota, where he had done business for decades. (The Business Observer)
A Michigan credit union lost $1.8 million in a $145 million circular check kiting scheme that involved two other Michigan banks, according to court documents. (The Credit Union Times)