Check fraud is not new. But over the Labor-Day Weekend the “Chase Money Glitch” trend gained traction and widespread attention.
The misleading TikTok videos spread rapidly, reaching a large audience suggesting Chase customers could get free money.
Dozens of videos suggested depositing a check with insufficient funds and withdrawing cash before the check is fully processed. This created the false impression of “free money.”
Unfortunately, thousands of people took part in the fraud that will have significant legal and financial repercussions, including but not limited to:
- Possible misdemeanor or a felony depending on the circumstances of the case.
- Restitution to Chase Bank.
- ChexSystems entry that can remain on reports up to 5 years.
- Early Warning Services (EWS) fraud report that can remain up to 7 years.
- Bank account closure.
- Stain your reputation if convicted of check fraud.
Reasons The Chase Money Glitch is Check Fraud
Intentional Deception
The “glitch” involved knowingly writing checks for amounts exceeding the available balance in the account. This is a deliberate act of misrepresenting one's financial standing to the bank, a key element of check fraud.
Exploitation of a System Error
Even if a system error existed, taking advantage of it to gain unauthorized access to funds is fraudulent. It's akin to finding a loophole in a store's checkout system and using it to steal merchandise.
Financial Gain at Bank's Expense
The “glitch” resulted in individuals withdrawing funds they were not entitled to, causing direct financial loss to the bank. This unauthorized transfer of funds is a core characteristic of check fraud.
Intent to Defraud: Whether individuals fully understood the legal implications or not, the actions demonstrate an intent to deceive the bank and obtain money through false pretenses. This intention is crucial in establishing check fraud.
Negative Account Balances
Following the “glitch,” many accounts were frozen with negative balances, indicating that the funds withdrawn were not legitimate and were essentially loans obtained under false pretenses, again highlighting the fraudulent nature of the act.
Why Chase Allowed Customers To Withdraw Funds
It's called provisional credit, it's not a glitch. Chase assumes customers are acting in good faith when depositing a check so they make some funds available immediately.
This gives customers immediate access to some of the funds. Just imagine getting paid every two weeks but having to wait several days before you can use the money for bills, rent, groceries or gas.
That's why provisional credit is vital to customers, it's like a temporary loan from the bank while the bank clears the deposited check, but it's not guaranteed money until the check fully clears.
Key points about provisional credit
Temporary Access to Funds: It allows you to access some or all of the deposited amount before the check fully clears. This helps with cash flow, especially for large checks.
Bank's Risk Mitigation: It's not a guarantee that the check is good. If the check bounces or has issues later, the bank can reverse the provisional credit and debit your account.
Varies by Bank and Check: The amount of provisional credit offered, and how long it lasts, can differ between banks and depend on factors like the check amount, your account history, and the check's origin.
Check Clearing Process: The provisional credit is typically removed once the check clears and the funds are officially available in your account. This can take a few business days.
Potential Fees: If the check bounces after you've used provisional credit, the bank may charge you fees for the returned check and potentially overdraft fees if your balance goes negative.
Final takeaway
Intentionally writing a bad check with, especially against your own account, is an obvious and idiotic act of fraud. Chase has their customers' name, address, cell phone number and Social Security number. There's no where to hide.
A Chase spokesperson said:
“We are aware of this incident, and it has been addressed. “Regardless of what you see online, depositing a fraudulent check and withdrawing the funds from your account is fraud, plain and simple.”
