JPMorgan Chase said to be investigating TikTok check fraudsters

JPMorgan Chase suggested Friday that it would refer cases of check fraud, which recently went viral on TikTok, to law enforcement.

"As with any fraud-related issue, we review internally and refer to law enforcement as appropriate," said a spokesperson for the bank in response to a response for comment on the TikTok trend. "Regardless of what you see online, depositing a fraudulent check and withdrawing the funds from your account is fraud, plain and simple."

The Wall Street Journal first reported that the bank plans to report information to law enforcement about customers who exploited a supposed glitch that allowed these customers to withdraw, in some cases, tens of thousands of dollars off of bad checks.

The scheme, called check-kiting, exploits regulations that require banks to make some of the funds from deposited checks available the business day after a customer deposits the check.

When a customer deposits a check, the first $225 must generally be available to them the day after they make the deposit, according to the Office of the Comptroller of the Currency. The next $5,300 must typically be available the second day, and if the check is larger than $5,525, the bank can hold the rest, often for up to five days.

According to the Wall Street Journal, the bank estimates that "thousands" of people took advantage of the so-called glitch, citing "people familiar with the matter." The publication did not explain why it did not name the people. It is a common practice for news outlets to grant anonymity to sources willing to discuss pending legal matters.

"Chase has frozen some accounts already and could continue doing so as it finds more instances of fraud," according to the Wall Street Journal. "The bank also plans to share surveillance footage and other information related to individuals who allegedly committed the fraud with authorities."

Earlier in the week, Chase said about the TikTok trend that it was "aware of this incident, and it has been addressed." The bank has not elaborated on how it addressed the matter.