My friend, Annie McGuire of Fraudaid.com sums it up very well on her site when she breaks down the definition of commonly used banking terms, and has allowed me to use that information from her site. (Why re-invent the wheel when someone else already has one working perfectly well!)
What "Clear" really means: "The check has cleared" does not mean the money in your account belongs to you. It only means that the clearing house has not sent the draft back for non-sufficient funds, closed account, or flag instructions on the account. It does not mean the draft was written by the account holder.
Depending on the size or purpose of the account, the account holder may not notice the absence of funds for several days after the draft has reached his bank. In fact, an account holder may have up to one full year to report an unauthorized draft.
Bank statements are usually sent out on the 1st or 15th of the month. If the transaction took place near one of those dates, the account holder may be unaware of the unauthorized transaction until statements are sent out the following month and time is taken to balance the statement. - Fraudaid.com
The problem with this is that when the average bank customer hears that a check is "clear" they think that it means that the check is good and that they can now use the money with no concerns that there is anything wrong with the check or the account.
What "Available funds" really means: "Available funds" does not mean the money in your account belongs to you, even if a hold has been taken off the draft.
When you deposit a check into your bank account, your bank advances you the money for that check to keep the wheels of commerce moving. Of the millions and millions of checks processed every day, a relatively small number are returned because of a problem; because of this, banks and credit unions must automatically credit depositor accounts within a certain number of days.
A bank or credit union can make an exception to the rule and wait for a longer period of time on any given deposit before crediting the depositor account, but apart from such an exception the credit is automatic.
This credit to your account is called a "provisional loan" and is actually a no-signature loan from your bank to you. It does not mean that your bank has been credited by the account holder bank. - Fraudaid.com
Again, when the average banking customer hears the terms "funds available" they feel safe that the check is good and that they can proceed with using the money with no concerns about liability, but this is not the case.
Another banking term that is used a lot is "verified as good". When I brought the cashier's check that we received in 2002 into the bank and asked them how long I would have to wait to be sure that this check was good, they told me that "the check would be verified as good in 24 hours". I assumed that this meant that there was a computer system, or at very least a person who would call, and actually VERIFY that the check is a good, legitimate check that could be honored. This is not the case. When the bank told me that the check was "verified as good" it was just their way of saying that the "funds were available".
The only time the money in your account really belongs to you is when the check or money order has been HONORED, meaning your bank has been credited (paid) by the account holder bank.
ALWAYS ask your bank if the draft has been honored and DO NOT TOUCH THE MONEY until it has.
When in doubt about a draft, tell your bank to send the draft for COLLECTION. - Fraudaid.com
The problem with this is that most banking customers do not know this information until it is too late. This is why we at ScamVictimsUnited.com would like to see more information to inform customers on what these banking terms really mean, and encourage the use of clearer, more understandable terminology. We feel that the terms "funds pending" would be a better way to let customers know that the money is in their account, but the check has not yet been honored. Also, the banks could further clarify things by telling customers who are asking about the status of a check that it "has cleared but has not been honored" when the bank has not yet been credited by the account holder's bank.