Ethical Dilemma Minicase: Check Kiting
Introduction: - Writing a check for a sum that is greater than what is in your bank account is known as "check kiting," which is unlawful. You count on the fact that it usually takes at least a few days for a check to clear, giving you enough time to raise the money or to earn interest on funds you don't have. Without ever having enough money, some fraudsters would keep switching between multiple accounts. Case identification: - Scott, operations manager at a small bank Kathy, Scott’s co-worker “I found another check kiter,” said Kathy as she showed the checking account statement to Scott. “It is not a big one, though. Just a few hundred dollars.” Check kiting increased when the local economy was bad. Customers took advantage of the bank’s generous policy of not waiting until deposited checks had cleared before allowing the customers to have access to the money. A check kiter deposited a bad check from another bank in Scott’s bank. Then he or she wrote a check from Sc