This action is repeated as necessary until legitimate funds can be deposited into the account.
That practice became known as flying a kite, as there was nothing to support the loan besides air.
Circular kiting describes forms of kiting in which one or more additional banks serve as the location of float, and involve the use of multiple accounts at different banks.
In its simplest form, the kiter, who has two or more accounts at different banks, writes a check on day one to themself from Bank A to Bank B (this check is referred to as the kite), so funds become available that day at Bank B sufficient for all checks due to clear.
On the following business day, the kiter writes a check on their Bank B account to themself and deposits it into his account at Bank A to provide artificial funds allowing the check they wrote a day earlier to clear.
In these cases, the kiter writes check(s) to one or more places of retail (usually supermarket(s)) that offer cash back in addition to the amount of a purchase as a courtesy to their patrons.
Following the transaction, the kiter deposits the cash received back into his/her bank on the same day in order to provide sufficient funds for other check to clear, while the check written that day will clear one or more business days later.Bank A does not recognize the routing number and returns the check to the clearing house, where it is sent to Bank B, which does not recognize the account and bank name, again returning the instrument to the clearing house, where the check cycles endlessly.Retail-based kiting involves the use of a party other than a bank to unknowingly provide temporary funds to an account holder lacking funds needed for check to clear.In this way, instead of being used as a negotiable instrument, checks are misused as a form of unauthorized credit.Kiting is commonly defined as intentionally writing a check for a value greater than the account balance from an account in one bank, then writing a check from another account in another bank, also with non-sufficient funds, with the second check serving to cover the non-existent funds from the first account.It has also been used by those who have some genuine funds in interest-bearing accounts, but who artificially inflate their balances in order to increase the interest paid by their banks.