Using cheques for financial transaction is more frequent these days. The use of cheque as a financial instrument is done in the good faith that the cheque will be honored and cleared when given in for processing in a bank. The condition when the actual financial transaction is not possible by the cheque or the cheque itself being invalid is called cheque fraud.
The common method in which cheque fraud is done is by having insufficient fund in the account to clear the cheque and still offering the cheque. These cheques do not get cleared when presented in the bank for transaction due to insufficient funds. Another method is purposely making the funds insufficient by the time cheque is presented in a bank for clearing.
Issuing a cheque on a closed account is another way of cheque fraud. Then there is the actual physical alteration of the cheque by using a false signature or altering the amount inscribed on the cheque originally. Presenting a false cheque or stolen cheque is also check fraud.
Regular cheque payments are there these days to make loan EMI payments (home loan, car loan, etc.), mutual fund payments, utility bill payments etc.