We will be offering Mobile Banking to our consumer customers soon. There is one difference in capabilities between how a client can use Mobile Banking and our current web based banking, and that is the ability to “take a picture” of a check for deposit (Mobile RDC). There are no other features that are offered. Basically just a application for ease of access and Mobile RDC. There are no new fees or any fees associated with the use, outside of what would already be charged. Reg CC Availibility does not change.

Are there any advanced/change in terms required notices we must send to our CURRENT clients? Reg E?

Mobile RDC (MRDC) is a service/product that doesn't fit neatly in to any regulation's purview. Deposits made with MRDC aren't subject to Regulation E, nor are they subject to Regulation CC. And they clearly aren't the stuff of Regulation DD. So I don't think you have change-in-terms or advance notice requirements. But you may have Reg E new EFT service requirements.

What you do have is You also have a contractual issue. If you offer RDC to business depositors, determine what parts of your RDC contract or agreement need to be used with your MRDC customers. One suggestion is that you include language that will allow you to charge back to the depositor any MRDC-deposited item that is sent back to you under a claim that it was presented for payment twice.

Also, because MRDC is a version of RDC, you should make sure you've complied with the guidance found in the FFIEC's Risk Management of Remote Deposit Capture document from 2009.

As always John, thanks.

This is quite interesting. Would you mind, John, explaining why Reg E and Reg CC don't apply to MRDC? Doesn't Reg E apply to online banking?

Thank you.

I went back and reviewed the EFT definition and have come to a difference conclusion abut Reg E coverage. I've revised my response above. I'll PM those involved.

OK. Thanks.

We are in the same stage as the original poster in terms of setting up true mobile banking and MRDC. I'm still not clear on if we have to send advance EFT change notices out. Our current disclosure mentions the fact that our online banking can be accessed through mobile devices and tablets.

We are working on separate disclosures for the new mobile app we're developing and those will have to be acknowledged when signing up for the app. Wish there were a template but I guess there's not.

So again, my main question is if we have to send revised EFT disclosures to all of our deposit customers regardless of whether or not they plan on using the mobile app.

I appreciate your feedback. Thank you.

You're adding an EFT service, not adding or increasing a fee for a current service, and not restricting access to EFT. So there's no advance EFT change notice requirement.

Great. Thank you so much.

Would love to know if anyone has participated in or knows of any webinars that might cover all of the aspects of setting up mobile banking.

thank you John.

Hey Complyorelse,

When you get your disclosures for the mobile app that they will acknowledge could you send me a draft? We are looking into doing that in the future but not sure what it would look like.

Thanks

John - I'm not clear on the reason for the change in regard to Regulation E coverage? I'm just starting to tackle this for a soon-to-lauch service (compliance was invited to the table late in the process) and thought I understood that Reg E would not apply. I'm confused! Thanks in advance for the assist.

Can the customers do transfers with the Mobile App? Reg E will apply there.

It's mobile RDC that we are launching. Earlier I read an opinion that the deposit began with a paper check, so Reg E did not apply - which did make sense. Anyone? It's a basic question, but I've seen so many comments that tie together mobile banking, mobile payments and mobile deposits, I'm confused and trying to clearly sort it out.

Our mobile app is an extension of our online banking product and we do allow transfers. That's currently in our Reg E disclosure. But with the addition of mobile deposits, I saw the comment here about the position change in coverage and did not know the "why". My concern is on the error resolution side. The responsibility for this service will (generally) be with a different group than our retail ops staff that handles other Reg E errors.

Talking to myself...

Is it because this service is subject to a written agreement and the transactions will be ongoing (not one time)? Making the deposit via the telephone is a given, but starting with a check and processing as a check kept me from thinking of this as an electronic fund transfer. Comments, anyone?

John,

I see where you changed your mind regarding Regulation E coverage of MRDC deposits (as I believe that is what was being specifically referenced and not other EFT services available through a mobile banking platforms, such as bill pay, etc.) and I was wondering if you could elaborate a little more on the specifics that caused you to change your mind?

Thanks!

It meets the definition of an EFT under 1005.3(b)(1), even though the phone does not qualify as an electronic terminal, since 1005.3(b)(1) includes transactions initiated by phone.

On the other hand, Comment 3(b)(1)-2.iv says that "[t]ransactions arising from the electronic collection, presentment, or return of checks through the check collection system, such as through transmission of electronic check images" are not EFTs.

I don't think the exclusion under Comment 3(b)(1)-2.iv applies, since it is meant to refer to electronic check clearing between banks, not the depositing of checks via RDC.

So where are we left on this? I don't think there's another reason to exclude MRDC transactions initiated by a consumer.

Sounds like I am waffling. Guilty as charged. Is there anyone that has figured this out?

I sure haven't, that's why I was asking

I did actually go back and pull the FR from 2006 when this language was added and I did find the following within the preamble. I would suggest that the Fed had no intention to pull put a deposit that was made to an account through the use of a MRDC deposit under the auspices of Regulation E. The item being deposited remains an image and is not translated to a true electronic funds transfer.

Also, any error resolution process would not follow the typical EFT process, as any adjustments that you would be making would be following your cash letter adjustment process and not an EFT return process.

What do you think?

One industry commenter expressed concern that the proposed regulatory language was too broad in stating that a transaction is covered by Regulation E where a check is “used as a source of information to initiate a one-time EFT.” According to the commenter, some may interpret the language to include transactions arising from electronic check presentment or image exchange. The Board agrees; § 205.3(b)(2)(i) is intended to apply only when a payee uses a check as a source of information to initiate an EFT from the consumer’s account. New comment 3(b)(1)-2. iv clarifies that transactions arising from the electronic collection, presentment, or return of checks through the check collection system, such as through the transmission of electronic check images, are not EFTs covered by Regulation E.

That does it for me. Sometimes you have to kick this stuff around a few times from a few perspectives. If Randy agrees that "pull" in his third sentence is supposed to be "put," I'm ready to say that neither RDC nor MRDC deposits are EFTs.

fixed

Thank you both for extending the conversation to clarify this and put my own waffling to rest!

Seeking confirmation that consumer RDC is not subject to Reg CC with regard to funds availability. I have viewed many bank's disclosures and agreements and find that about half state Reg CC applies and the other state that Reg CC does not apply. I can't seem to find anything from a regulatory body confirming either way.

I am going through this right now and was reading an industry publication article on mobile banking and RDC and it says to ask your vendor how they will process the checks. That it should be part of the agreement with them as there are several methods for processing RDC checks:

• ACH transaction – Covered by Reg. E and NACHA
• IRD – Covered by Check 21, Reg. CC and UCC Article 3
• Image – Determined by contract or, if there are no contract provisions, then UCC Article 3.

Oh wow, thank you for that piece of information!

I've read through this and I am still not understanding why Reg CC is not applicable to MRCD. Would someone please explain or point me in the right direction? Thanks.

It goes to the definition of "check" in the regulation. Under the regulation, a "check" includes the original paper check and a substitute check.

Under RDC and MRDC, a check is not deposited. An image is deposited. So far, the Fed has not updated its regulation to accommodate the new reality.