How to Know if a Check Will Bounce Before You Deposit It
Gain essential insights to evaluate check reliability and avoid financial pitfalls before depositing.
A “bounced check,” also known as a dishonored check or a non-sufficient funds (NSF) check, occurs when a bank cannot process a check because the account from which it was written lacks enough money to cover the payment amount. This situation can also arise from other issues, such as a closed account, mismatched information, or errors in how the check was filled out. For recipients, understanding the signs of a problematic check early is important to avoid financial inconvenience or potential losses.
Red Flags on the Check Itself
Examining a check for visual and informational cues can help determine its legitimacy. Poor print quality, including blurry logos, mismatched fonts, or low-quality paper, often indicates a fraudulent check. Any misspellings or grammatical errors on the check, such as in the bank’s name or address, should also raise suspicion.
Inspect the check’s specific details. Mismatched or unusually low check numbers can suggest a new or potentially fraudulent account. An unfamiliar bank name or logo, especially if it appears faded or copied, should prompt further scrutiny. Missing or incomplete information, such as no issuer address or an complete memo line, are additional warning signs.
Be cautious of checks from unexpected sources, particularly if they involve unusually large amounts or require you to send money back. Overpayment scams are common, where a check is sent for more than the agreed amount, and the sender asks for the excess to be returned. Such requests are a strong indicator of a scam, regardless of how legitimate the check may appear.
Verifying Check Authenticity and Funds
Before depositing a check, proactive steps can help assess its legitimacy and the availability of funds. Contacting the issuing bank directly can verify the check’s validity. Find the bank’s official contact information from a reliable source, such as its public website, rather than using any phone numbers printed on the suspicious check itself, as these could be part of a scam.
While banks cannot disclose account balances due to privacy regulations, they may be able to confirm if the routing number and account number are valid or if the check format aligns with their legitimate checks. You might need to provide the check number, issuance date, and amount for verification. Visiting a local branch of the issuing bank in person can offer a more secure verification process.
Understanding the distinction between “available funds” and “cleared funds” is important. Federal regulations, such as Regulation CC, mandate that banks make deposited funds available within specific timeframes. However, this availability does not mean the check has fully cleared and the funds are permanently settled in the account. Cleared funds imply the money has been fully transferred and carries no further obligations, while available funds are provisional and can be reversed if the check later bounces. It is advisable to wait for full clearance, which can take several business days or even weeks for larger or suspicious checks.
Steps After Receiving a Suspect Check
If you identify red flags or are unable to verify a check’s authenticity, taking specific actions can protect your finances. It is advisable to avoid depositing a check if significant concerns about its legitimacy remain. Depositing a fraudulent check, even unknowingly, can lead to complications.
Even if funds appear available in your account after depositing a suspect check, refrain from spending that money immediately. Funds made available by your bank are provisional and can be reversed if the check later proves to be fraudulent or bounces. If you spend these funds and the check subsequently bounces, you will be responsible for returning the money to the bank.
Document everything related to the suspect check, including a copy of the check itself, any correspondence with the issuer, and records of your verification attempts. This documentation can be helpful if you need to report the incident. Consider seeking advice from your own bank, which can offer guidance on the specific check. If you suspect fraud, reporting the incident to law enforcement or relevant consumer protection agencies is a step.
Understanding Bounced Check Outcomes
If a check you deposit ultimately bounces, there are direct financial and practical consequences for you, the recipient. The most immediate outcome is the reversal of the deposited funds from your account. Your bank will deduct the amount of the bounced check, effectively removing the provisional credit you received. This can lead to a negative account balance if you had already spent against the provisional credit, creating a financial shortfall.
Your bank will likely impose fees for depositing a returned item. These “returned deposited item fees” are distinct from non-sufficient funds (NSF) fees charged to the check writer. Specific charges vary by institution. If the reversal of funds causes your account to go negative, you might also incur overdraft fees from your own bank.
The reversal of funds also results in delayed access to the money you expected. This can cause inconvenience and potential financial strain, particularly if you had planned to use the funds for upcoming bills or expenses. If the bounced check was intended for a bill payment, you might face additional late payment fees from the biller. While depositing a bounced check does not lead to legal trouble for the depositor, repeatedly attempting to deposit known bad checks or involvement in fraudulent activities could result in legal consequences.