A widespread social media challenge that is putting people’s money at risk – what to watch out for

Social media pages are filled with financial advice, some helpful, some harmless, and some that could land you in federal prison. The latest viral “hack” falls squarely into the latter category, according to the Federal Trade Commission (FTC).

Some videos and posts claim that you can write a check for more money than you have in your account, deposit it into another account, and quickly withdraw cash before the bank realizes it. This conforms to the classic definition of the crime of issuing paper checks, which is a form of bank fraud.

“What [a social media] The video or post may not tell you that [it] It could leave you on the hook for paying all the money back, getting kicked out of your bank, and in serious legal trouble for bank fraud,” the FTC noted in a recent consumer alert.

Fraud behind the fad

The scheme exploits what is known as the “float period,” which is the period of time between depositing a check and the bank confirming that the funds are in the account from which it was withdrawn. During that period, you may see your balance increase, even though the funds haven’t actually cleared.

Under Federal Regulation CC, banks must provide at least $275 in check deposits by the next business day, while holding the rest until the check clears, usually within a few days. This small amount is only a temporary credit, intended to give consumers access to some of the funds they may need while the check is being processed.

In 2024, a temporary technical issue caused some JPMorgan Chase & Co. ATMs to fail.

According to TikTok videos reviewed by Investopediaparticipants are still required to write themselves large checks from accounts with insufficient funds, deposit them into another account, and then withdraw the funds before the original check bounces. While some videos on social media still suggest taking advantage of JPMorgan’s ATM glitch, which has since been fixed, others discuss using the same idea on a smaller scale to withdraw only the $275 available immediately, falsely suggesting it’s free cash.

Consequences of “fraud, plain and simple”

As the FTC warned in a recent consumer alert, just because money appears in your account doesn’t mean it’s really yours to spend. Using a “floating” window to access funds you wouldn’t have if the check cleared immediately — regardless of the amount — is not a loophole. This is what JP Morgan refers to as “fraud plain and simple.”

A JPMorgan spokesperson said that in the year since the social media trend first took hold Investopedia The bank filed 10 federal lawsuits against customers who claimed they followed instructions on social media. It also sent more than 1,000 payment demand letters to individuals it believed were involved in these schemes.

Beyond civil liability, those who engage in the practice face the possibility of criminal charges at the state and federal levels. Banks can also close your accounts and flag your name in national databases, making it very difficult to open accounts at other institutions in the future.