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#1990522 - 01/22/15 09:43 PM Endorsement on Mobile Deposits
CSB98 Offline
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Wisconsin
We are looking to implement a requirement for any mobile deposits to have the restrictive endorsement "For Mobile Deposit Only" in an attempt to stop the check from being presented twice. Are there any potential consequences if we do not check the back for the endorsement as it is presented through mobile deposit? I'm asking on behalf of the operations department. My thought is, if you're not going to check, then why require it?

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#1990571 - 01/23/15 12:37 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
rlcarey Offline
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You require every check to be endorsed - you don't look at "every" check do you? It is just one step in trying to prevent fraud that might help. Let them run operations. You can run compliance.
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#1990583 - 01/23/15 02:00 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
JacF Offline

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If you require it, most depositors will still do it, whether you check or not. The incremental benefit is that if the item is subsequently presented over the counter, the restrictive endorsement could alert the teller that the item has already been deposited.

The risk to your bank, as the mobile deposit facilitator, is that any double dipping done by your depositors using your mobile banking service will likely result in your bank being responsible for the duplicate item.

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#1993184 - 02/03/15 08:18 PM Re: Endorsement on Mobile Deposits [Re: JacF]
MtnHiker Offline
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New England
I notice some of the checks that our consumers write present twice, and I notice one presentment has the restrictive endorsement which was most likely added to the check image by the depository FI's RDC software. Then the second presentment does not have the "for mobile deposit" statement on it.

I want to throw this out there because having the software add the "for mobile deposit" to the image is not the same as having the payee write it his or herself. If it's added to the image only, the payee still holds a check that does not have "for mobile deposit" written on it, which they may try to deposit over the counter.

That said, "for mobile deposit" written on the back is not foolproof, if it's deposited over the account at your FI or elsewhere, an inattentive teller may not notice (or care about) the "for mobile deposit" written on the back. While not foolproof, it doesn't hurt to cover all the bases and have the payee endorse it in this manner so you can tell yourself you took every possible measure to flag the item as something already processed through RDC.
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#1993893 - 02/05/15 07:20 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
BetsyS Offline
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I heard a compeling UCC arguement yesterday for requiring the customer to write a restrictive endorsement along the lines of: "John Doe, for mobile remote deposit only at XYZ Bank".

The scenario was a check deposited at XYZ Bank through mRDC without the restrictive endorsement, then subsequently cashed at a check cashing business. Their opinion was that despite negotiating the check first, the mRDC Bank would be held liable for the duplicate presentment in a court of law because the endorsement was blank and the Check Cashing business was in possession of the paper check. If however the check was cashed with the above restricted endorsement, the Check Cashing Business would then be held liable for negotiating it contrary to the endorsement restriction.

I would be interested in other opinions on the above scenario.
Last edited by BetsyS; 02/05/15 07:21 PM.
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#1993906 - 02/05/15 07:47 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
SeekingKnowledge Offline
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#1994301 - 02/06/15 08:42 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
John Burnett Offline
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We can only hope the Fed resolves this issue if and when they finally issue a final Reg CC rule that includes rules on mRDC items.
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#1996654 - 02/18/15 06:21 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
Ric30 Offline
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IN
For what it's worth, there should be a setting on the software that will reject a check at the deposit time if it does not detect an endorsement on the back image. The client would have to endorse it and take a new photo. But, as has been mentioned, you still have to rely on the front line to question a check with an endorsement on it. We also have good duplicate detection software so we're able to catch most duplicates in Operations and delete them before end of day.

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#1997092 - 02/19/15 09:50 PM Re: Endorsement on Mobile Deposits [Re: BetsyS]
madukes Offline
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Under the fed guidelines for "PAID" cases (items paid twice), you as the paying bank can determine which presentment gets debited for the item by how you present the adjustment to the fed. If we have an item pay twice, we always go after the mobile deposit rather than the OTC item or check cashing agency item. This way, the depositing bank knows their customer is depositing items twice.

If we, as the depositing bank, are informed of an item our customer processed twice, we turn off their mobile deposit capabilities. We have also had business customers fire employees for multiple presentments of their paychecks.

Our check processing company has a program we use that catches a lot of duplicates (deposited here) before they go out the door. The item is pulled from the work and if it truly a duplicate we debit our customer. If it is not, then the check is processed the next day.

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#1997102 - 02/19/15 09:57 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
John Burnett Offline
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Another good reason to go after the mobile deposit (with apologies to those of you whose banks offer and promote its use) is that the bank accepting mobile deposits has made the choice to accept images for deposit with the knowledge that doing so adds risk to the overall system. So the theory is that the mobile-deposit accepting bank ought to accept the responsibility for the double presentment.

That theory is also used in the Fed's most current proposal to amend Reg CC, where it would include an indemnity by the mobile deposit accepting bank in favor of a bank that suffers a loss from a chargeback of the same check deposited in paper form after having been mobilely deposited.
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#1997388 - 02/20/15 08:43 PM Re: Endorsement on Mobile Deposits [Re: John Burnett]
madukes Offline
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Thanks John!

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#2181617 - 06/13/18 04:38 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
ineedhelp Offline
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Do we have to include our bank name as part of the restrictive endorsement when we accept mobile deposits effective 7/1/18? This is part of the new indemnity in Regulation CC. When I read the press release in the federal register it doesn’t specifically say it has to have the bank’s name but then later on in the document, the example it gives mentions “for mobile deposit at Depositary Bank A only” and the customer’s account number at Depositary Bank A and I had made a note from a training I attended that said we had to include our bank's name to take advantage of the protection. Boss said he wants to do it exactly as the regulation states. Where is the actual law or regulation that I can read that tells us exactly what to do?

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#2181665 - 06/13/18 07:08 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
John Burnett Offline
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No, you don't need to include the bank name in the indorsement. It can read "For mobile deposit [signature]." That can help prevent the same check from being deposited in paper form at your bank or another bank and protect your bank from having to honor an indemnity claim from a bank that does accept the paper check for deposit because the "mobile deposit" phrase in the restrictive indorsement should put the other bank on notice.

What it won't do is alert another bank that takes the check image in a later mobile deposit to the fact that the check was previously deposited via mobile deposit. Adding your bank's name (or short name) to the indorsement alerts that second bank to which the second mobile deposit is being attempted that it's likely the check was mobile deposited before (to your bank). That can prevent double dipping the check (my phrase) even though there would be no indemnity claim in such circumstances.
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#2181666 - 06/13/18 07:14 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
ineedhelp Offline
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Ok. Thanks John! I appreciate your response!

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#2182029 - 06/18/18 01:13 PM Re: Endorsement on Mobile Deposits [Re: John Burnett]
WIBanker91 Offline
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WI
I have seen many banks instructing customers to include either "mobile deposit" or "remote deposit" based on the method of deposit as part of the endorsement. Can we not just instruct them to use "remote" for either method? I think they will just be confused if they have to be specific-they are both really "remote".

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#2182114 - 06/18/18 05:32 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
John Burnett Offline
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Although the examples in Regulation CC (as modified effective July 1) only use "mobile deposit," the rule that's involved relates to indemnification for loss relating to remote deposit capture. The most notorious problems with duplicated deposits in error or fraudulently made relate to mobile deposits, of course. However, there have been cases in which a merchant's retained original check involved in an RDC has been taken by the merchant or an employee and deposited in paper form after having already deposited as an image.

"Remote" is the more inclusive of the two options, since RDC includes both the merchant-paradigm image capture and mRDC mobile deposit. If you're dealing with customers who might use both forms of RDC, use the "KISS" method and have them use "Remote deposit." It will meet the requirements of the regulation.
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#2182178 - 06/18/18 08:04 PM Re: Endorsement on Mobile Deposits [Re: John Burnett]
WIBanker91 Offline
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Thank you-I thought I was missing something. KISS it is

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#2182292 - 06/19/18 03:55 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
TryingtoComply Offline
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The West
Our bank does not want to impose any restrictive endorsements based on negligible losses in the past, and customer service issues. Also, we are very picky with who we allow to have the service and we conduct onsite training for users. Our RDC scanners cannot spray a restrictive endorsement on the back and we do not want to require our customers to stamp each and every check they deposit. We understand the risk, but am wondering what the regulators may think of our decision.

Our decision is well documented, but am interested in what others think of this approach.
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#2182350 - 06/19/18 07:17 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
John Burnett Offline
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The regulators probably won't give it a second thought unless your decision blows up on you and you sustain significant losses, and I don't think that will happen.

The risk is really more with mobile check deposits than conventional RDC.
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#2182358 - 06/19/18 07:52 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
Dog Lady Offline
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Joined: Dec 2015
Posts: 74
John - From your perspective, why is the risk more with mobile than conventional RDC? I don't see how they differ related to this.

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#2182360 - 06/19/18 08:03 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
BrianC Online
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The difference is that we generally perform more underwriting and vetting of our commercial clients due to the volume. We may even audit their premises annually to make sure that checks and equipment are properly secured to minimize the risk of duplicate presentment, theft, etc.

We have no such controls on our consumer customers using a mobile phone.
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#2182372 - 06/19/18 08:48 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
Dog Lady Offline
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Ah - we are a business bank with almost no consumer portfolio. Mobile will be offered for our business clients with lower volume of checks. So it isn't different for us.

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#2182499 - 06/20/18 08:24 PM Re: Endorsement on Mobile Deposits [Re: CSB98]
John Burnett Offline
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The other reason the mRDC is more risky is that many, if not most, business RDC installations have the ability to mark the physical checks to indicate they've been imaged and deposited. Many such businesses also have a routine shredding routine that destroys "used" checks X days after they are deposited. That isn't the case with mobile deposits.
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