Fighting Mobile Deposit Fraud Without Inconveniencing Customers

by Edward O'Brien 0

Bank technology vendors are coming up with new ways to fight atype of fraud that was itself spawned by tech innovations: double dipping ofdeposits.

Allowingcustomers to deposit checks by taking a photo with a smartphone or tablet hasopened this new avenue for crime. Unlike depositing a check at the ATM or atthe teller line, the consumer keeps the physical check after depositing it viaa mobile device. So the customer could try to “serial deposit” orcash the check at, say, a check cashing center or another bank, on purpose orby accident.

Sofar, financial institutions have put holds on checks and set limits on mobiledeposit capture usage to mitigate fraud. Some evaluate the length of therelationship with the customer and the type of account she has, among otherrisk clues. And the vendors selling the imaging technology report low fraudrates with their bank customers.

As new technologiescome with new challenges – and opportunities – financial institutions,technology providers, and regulators continue to grapple with the proper way toroll-out and manage new capabilities. One example – mobile remote deposit capture can be used for nefariousdeeds by some fraudsters, but vigilant FIs can thwart fraud by enabling fasterclearing times for checks to reduce duplicate deposits.

This movement towardmore speedy settlement of accounts is valuable in this situation, as well asimproving overall customer satisfaction by enabling real-time or near-real-timeacknowledgement of pending transactions.


Overview by Ed O’Brien, Director of Banking Channels for Mercator Advisory Group

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