Demand Draft

A method used by individuals to make transfer payments from one bank account to another. Demand drafts are marketed as a relatively secure method for cashing checks. The major difference between demand drafts and normal checks is that demand drafts do not require a signature in order to be cashed.

Also known as "remotely created checks".

Demand drafts were originally designed to benefit legitimate telemarketers who needed to withdraw funds from customer checking accounts. However, the lack of a signature required to authorize the transfers have left demand drafts open to fraudulent use. The only information needed to create a demand draft is a bank account number and a bank routing number - this information is found on a standard check.

In 2005, the Federal Reserve proposed new regulations over the fraudulent use of demand drafts. The regulation increases a victim's ability to claim a refund and makes banks more accountable for cashing fraudulent checks.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Demand draft — A demand draft A demand draft, also known as a remotely created check, a tele check, or check by phone, check by fax or echeck, is a check created by a merchant with a buyer s checking account number on it, but without the buyer s original… …   Wikipedia

  • demand draft — Synonyms and related words: CD, IOU, MO, acceptance, acceptance bill, bank acceptance, bank check, bill, bill of draft, bill of exchange, blank check, certificate, certificate of deposit, certified check, check, checkbook, cheque, commercial… …   Moby Thesaurus

  • demand draft — /dɪ mɑ:nd drɑ:ft/ noun a draft which is to be paid immediately …   Dictionary of banking and finance

  • demand draft — noun see demand bill …   Useful english dictionary

  • draft — Synonyms and related words: CD, IOU, MO, abbreviation, abbreviature, abrege, abridgment, abstract, acceptance, acceptance bill, adumbrate, air current, arrangement, article, attraction, autograph, bag, bang, bank acceptance, bank check, beverage …   Moby Thesaurus

  • demand — I v. To claim as one s due; to require; to ask relief. To summon; to call in court II n. The assertion of a legal right; a legal obligation asserted in the courts. An imperative request preferred by one person to another, under a claim of right,… …   Black's law dictionary

  • demand bill — noun or demand draft : sight draft * * * a bill payable upon presentation. * * * demand bill, a bill of exchange payable on demand …   Useful english dictionary

  • demand note — A promissory note that calls for principal to be payable on demand. In recent years, courts have significantly restricted the circumstances under which a bank could make and enforce a demand for repayment under a demand note. American Banker… …   Financial and business terms

  • demand bill — /dəˈmænd bɪl/ (say duh mand bil) noun a bill of exchange, note, etc., payable on demand or presentation. Also, demand draft, demand note …   Australian English dictionary

  • draft — 1 n 1: a preliminary version of something (as a law) 2 a: a system for or act of selecting individuals from a group (as for military service) b: the act or process of selecting an individual (as for political candidacy) without his or her… …   Law dictionary

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