What Happens If a Bank Returns a Check for Fraud?

Being the victim of fraud can be one of the most violating events that can happen to a person. Having someone compromise a bank account, wash checks or otherwise forge authorization forces someone into a financially compromised situation. Someone who has been given a check, deposited it and spent the money only to find out it was fraudulent may not be able to reclaim the money.

Bank Account

As soon as fraud is suspected with a fraudulent check, the bank will try to contact the account holder and/or freeze the account until an investigation can be done. For accounts that have been compromised, the bank will request the account be closed then re-opened, creating a headache for the account holder.

Police Report

When a check is returned for fraud, the police are immediately contacted by the bank. It is up to the account holder to file a police report in order to release liability for the fraud.

FDIC Coverage

Part of FDIC coverage is to insure bank depositors from fraudulent activity. If a police report is filed and the account holder is determined to not be involved in the fraudulent activity, the bank and FDIC absorb the costs.

Federal Offense

Once a police report is filed, federal investigators are called. Bank fraud is considered a federal offense and taken seriously.

Received Fraudulent Check

Those who are the recipient of a fraudulent check are in a precarious position. If the check has been deposited and cleared, the person may never be able to reclaim the money they were owed and paid by the check.