Check-kiting is a form of check fraud that exploits chargeback time frame, meaning when a bank receives deposits of an item it increases the available balance in a customer's account by the item amount.
This allows an account holder to withdraw non-existent funds from their account. Through this checks are misused as a form of unauthorized and fraudulently procured credit.
When that happens the collecting bank will not receive the actual funds until the check clearing process is completed through cash letters with the Federal Reserve and payment by the payer bank.
According to court documents if an account holder withdraws funds credited to an account for an item before the payer bank receives the incoming return cash letter returning an item, even where the item has no cash value because of a bank's refusal to pay on the item.
Through check-kiting account holders use two or more banks and intentionally write worthless checks from an unfunded account and deposit bad checks at a collecting bank.