Checks are a convenient way to pay for items without using cash or a debit card, but have become less widely accepted due to their potential set of problems. Consumers writing checks must be careful to use them properly, and those accepting checks need to make sure that they can trust the customer.
How it Works
A check is a signed piece of paper that is usually printed by a bank and signed by the account holder. When the check is written for a specific amount to someone, it is a promise that the writer's bank account can immediately pay the check to the recipient for their goods and/or services.
A check can be written for any amount even if the writer has no money in his account. This can cause legal trouble for the check writer if the document is dishonored, or “bounces,” and financial problems for the person expecting the proceeds of the presented check.
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Theft is another danger of using checks. Checkbooks can be stolen and easily misused, and even with just the account number, a criminal could find ways to quickly make new checks and write them on behalf of the true checking account holder.
Checks are usually like cash, in that if they are lost or stolen, there’s little recourse to be reimbursed for any unauthorized activity. In addition, if a large amount of checks are written without the account holder’s consent, she might be required to make up for them to avoid lawsuits and even jail time.
Writing a bad check, even accidentally, has led to people being arrested and even imprisoned for check fraud. Bounced checks are taken very seriously these days by both merchants and law enforcement.