Is it a crime to pass a bad check or use a canceled credit card?

It is a crime to pass a bad check and to use a canceled credit card.

Writing a bad check or engaging in check-kiting schemes is fraud and it carries heavy penalties. The severity of the penalty depends on how the crime is defined in your state. Depending on where you live, the crime can be called anything from check floating to forgery.

If you are accused of any of these crimes, a criminal defense attorney will be essential in proving your innocence or reducing the penalties as much as possible. To begin your search for a criminal defense lawyer near you enter your ZIP code into our search tool now.

Passing a Bad Check: What Does It Mean?

For an individual, the crime of passing a bad check happens when you deliberately write a check for an amount you know is not available in a bank account or against an account that has been closed.

Some people “float” checks, meaning, they write a check for money they know is not available with hopes of covering it with a future deposit. In most cases, the person will not be charged with a crime if the money is replaced within ten days of receiving insufficient funds notice from the bank. This is a risky game to play because forgetting to make that deposit or ignoring a notice from the bank can result in anything from a hefty bank fee to jail time.

Along the same spectrum of bad check-writing crimes is when you change an account number or other information to delay a check’s processing. People who do this can be charged with forgery and face severe criminal penalties. When businesses engage in the same type of activity, it is known as embezzlement and carries civil as well as criminal penalties.

Recently, there have been a number of check “kiting” schemes. In May 2010, the owners of a popular Chicago restaurant chain were charged with this crime. Here’s how it works: Say you have funds in one account in the amount of $20. Knowing this, you write a check against that account for $100 and deposit it in another bank account and withdraw the money before the check clears.

Bad Check & Canceled Credit Card — Penalties

The penalties for either crime vary from one state to another. Depending on the circumstance, there can be civil or criminal penalties.

In New York, passing a bad check can get you up to 3 months in jail or a fine of up to $750 based on the face value of the check and additional penalties. In California, if it is a first-time offense and the amount is less than $200 the penalty is limited to up to a year in county jail. The civil penalty in California is treble, or triple damages, of no less than $100 and no more than $1500.

Texas has some of the toughest bad check writing and fraud laws in the country. The various forms of check forgery are part of the felony system and would be called a “state jail” felony. The penalty for this crime is 180 days to two years in a state jail and a fine of no more than $10,000. These are the statutory punishments for check fraud. Banks and victims of check fraud can also sue in civil court, which could mean paying damages and attorney’s fees.

Other Consequences for Bouncing a Check

Even if your situation does not rise to the level of being prosecuted for fraud, the costs of bouncing checks is high. According to Bankrate.com, banks charge an average bounced check fee of $27 per occurrence. If you are convicted of bank fraud your bank accounts will be closed and no bank will issue checks to you or take them.

Companies like Telecheck report patterns of bad check writing and fraud to banks and retailers. These reports can cause accounts to be closed and future ones denied. If you are sued because of a bounced check or the debt is reported to a collection agency, this will show up on your credit report.

Finally, you will have a criminal record with a felony charge in most states. That means you will have to report this information, which can impact every part of your financial life, from applying for a job to renting an apartment.

Bringing it All Together

Whether intentional or by accident, misusing bank accounts can drive you into financial ruin or even jail. As we saw, writing a check that you can’t actually cover can sometimes not result in any penalties if you make a deposit in time. 

Unfortunately, doing it is still a crime. 

The penalties for writing a bad check, using a bad credit card, or altering the numbers on a check will vary from state to state. In every state, however, such actions can result in jail time, fines, and being subject to civil suits. In addition, a record of financial fraud can create long-term blemishes on your credit and criminal records.

If you are being charged with fraud, forgery, or another related crime you should find an experienced criminal defense attorney. To begin your search, enter your ZIP code into our search tool to find a criminal defense lawyer near you. 

Case Studies: Exploring the Consequences of Passing Bad Checks and Using Canceled Credit Cards

Case Study 1: Fraudulent Use of a Canceled Credit Card

Sarah found an old credit card that had been canceled due to non-payment. Without realizing the consequences, she used the card to make purchases at several stores.

However, the credit card company discovered the unauthorized activity and reported it to the authorities. Sarah was charged with credit card fraud, and she sought legal representation to navigate the criminal proceedings.

Her attorney advised her to review her homeowner’s insurance policy to determine if it provided coverage for any potential liability arising from the fraudulent use of the canceled credit card.

Case Study 2: Passing a Bad Check

John, facing financial difficulties, wrote a check to a local business knowing that there were insufficient funds in his account. The business attempted to deposit the check, but it bounced due to insufficient funds. As a result, John was accused of passing a bad check, which is a criminal offense in his state.

He consulted with a criminal defense attorney to understand his legal options and minimize the penalties he could face. The attorney also advised John to review his personal liability insurance coverage, such as umbrella insurance, to ensure he had adequate protection in case the business pursued a civil suit against him.

Case Study 3: Forgery and Check Kiting

Mark engaged in a sophisticated check kiting scheme by writing checks from one bank account to another, exploiting the time delay in check clearing processes.

He withdrew funds from multiple accounts before the checks bounced. Mark’s fraudulent activities were eventually discovered, and he faced charges of forgery and bank fraud. To defend himself against these serious criminal charges, Mark sought the assistance of a white-collar criminal defense attorney.

The attorney advised Mark to review his business insurance policies, such as crime insurance or fidelity bonds, to determine if they provided coverage for losses resulting from employee dishonesty or fraudulent activities.