A friend of mine was getting his paycheck direct deposited into his account on Thursday night at midnight. In the meantime, he wrote a check to himself and deposited it at the same bank to withdraw cash earlier Thursday night. At the time he wrote the check to himself, the funds were not in the account. However at the time the bank would negotiate the check in the morning, the funds would be there. Technically what is the issue here?
The bank put the customer on check systems and shut down his account. Is what my friend did a crime or is the bank's actions just bank policy? The bank keeps telling my friend that he committed a crime, but they never cite what crime it is. Is there a law that governs what my friend did?
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Writing a check against insufficient funds, depositing it and withdrawing funds from that deposit knowing that there are no actual funds in the account could arguably be a crime (the same crime one commits if one issues an NSF check). At best it's what a banker might call a form of kiting.
Knowing that a direct deposit of pay is due to arrive to cover the check might mitigate what your friend has been doing, but it doesn't change the fact that he was using the timing of transaction posting to obtain money from his pay before he was entitled to it. Most banks, once they discovered what was going on, would take a dim view of such actions. That's because the bank would be exposed if for some reason the direct deposit didn't show up one week.
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Writing a check against insufficient funds, depositing it and withdrawing funds from that deposit knowing that there are no actual funds in the account could arguably be a crime (the same crime one commits if one issues an 