What is a Rubber Check?

A rubber check is a check which is returned because it cannot be honored. There are a number of reasons why a bank may return a check, including insufficient funds in the account it is drawn upon, a closed account, or clerical error. When a check is returned, the person who wrote the check is generally charged a fee, and the payee may also be charged for the processing.

Rubber checks are also known as bad checks or bounced checks. The “bounce” and “rubber” in slang terms for checks which cannot be honored are a reference to the idea that the check “bounces” from payee to bank and back to payee when the bank returns the check. Some banks will allow a check to go through if it creates a small overdraft on a customer's account, while others will return any checks which cause a customer's account to enter a negative balance.

In some cases, someone makes a calculated choice to write a rubber check. This may be done for fraudulent purposes, as when someone writes a check on a closed account for the purpose of obtaining goods which can be used or sold. It may also be done in the hopes of taking advantage of “float.” Historically, it took several days for a check to clear a customer's bank account, and thus people could write checks when they knew they had insufficient funds, as long as a deposit would be entered shortly after the check was written to cover the amount when the check cleared. Changes in the way checks are processed has eliminated float at many banks and made this practice less common.

There are also cases in which a rubber check is written innocently. A bank customer may not be aware that a deposit hasn't cleared, or may not be aware that there is a problem with the account such as suspected fraudulent activity which resulted in a freeze or an unauthorized withdrawal from the account. In rare instances, the bank itself makes an error and returns a check for insufficient funds when the check is actually good.

When a check is returned, the payee can take action to recover the funds from the person who wrote the check. In many regions it is also legal to pass the fees for the processing of the rubber check on to the person who wrote it.

People can avoid the rubber check problem by using things like money orders and cashier's checks, which are good for the amount stated, or by using alternate methods of payment. Some businesses refuse to accept checks or will only take local checks due to concerns about rubber checks.