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#2085618 - 06/28/16 04:28 PM Does physical check trump mobile deposit?
Rollerman Offline
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I had understood Regulation CC was being updated to indicate that when a customer mobile deposits a check and then also manually deposits the physical check after, the change would protect the bank taking the physical check. However, to my knowledge that rule hasn't been finalized yet. Is there some other regulation I'm not aware of where this requirement may be in place?

I ask because we have a bank requesting we reimburse them for this very scenario and I didn't think that was in place yet.

Thank you in advance!

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#2085665 - 06/28/16 06:22 PM Re: Does physical check trump mobile deposit? Rollerman
John Burnett Offline
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And we all continue to wait for the Fed to drop the other shoe on that proposal, but it hasn't happened yet. I'll be an old man before it happens (wait, that may already be true!)

Curious about how the other depositary bank learned your bank had taken the check for deposit first. And is the same individual depositing it in both bank's (account in same name)?
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#2085695 - 06/28/16 07:34 PM Re: Does physical check trump mobile deposit? Rollerman
Rollerman Offline
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They learned it through the Fed and yes, the account is in the same name in both. Would Reg J come into play here?

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#2085754 - 06/28/16 09:01 PM Re: Does physical check trump mobile deposit? Rollerman
HappyGilmore Offline
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Pulling people out of the ditc...
paying bank that has the double debit can choose to return either the physical or mobile deposit - it is their choice. As the mobile is often made elsewhere, they frequently choose to return that. sadly, if they do within the proper adjustment time frame as stipulated by FRB, there is nothing you can do about it.
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#2085780 - 06/28/16 10:29 PM Re: Does physical check trump mobile deposit? Rollerman
Rollerman Offline
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is that in Reg J Happy?

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#2085831 - 06/29/16 01:21 PM Re: Does physical check trump mobile deposit? Rollerman
HappyGilmore Offline
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Pulling people out of the ditc...
Reg J is pretty vague, look at 210.12...

essentially says the paying bank is not liable for both an electronic and physical presentment, but it says nothing about which one you can return. absent this wording, banks I've discussed with return the one that is most beneficial to them
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#2085836 - 06/29/16 01:30 PM Re: Does physical check trump mobile deposit? Rollerman
Rollerman Offline
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Thank you John and Happy. You've both been most helpful and I greatly appreciate it!

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#2085850 - 06/29/16 02:11 PM Re: Does physical check trump mobile deposit? Rollerman
HappyGilmore Offline
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Pulling people out of the ditc...
we have had more than our share of our customers doing the double deposit, remote first, then a week or 2 later the physical check...they essentially now have 1 "oops, my mistake" and the 2nd time we ask them to bank elsewhere
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#2085881 - 06/29/16 03:46 PM Re: Does physical check trump mobile deposit? HappyGilmore
mtngrrl Offline
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Originally Posted By HappyGilmore
we have had more than our share of our customers doing the double deposit, remote first, then a week or 2 later the physical check...they essentially now have 1 "oops, my mistake" and the 2nd time we ask them to bank elsewhere


Why not just take away mobile deposit rights?
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#2085892 - 06/29/16 04:03 PM Re: Does physical check trump mobile deposit? Rollerman
HappyGilmore Offline
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Pulling people out of the ditc...
because I can excuse one "oops" moment, but continuing on after informing them takes it from an "oops" to "I'm doing this on purpose to get extra money in my account, if only for a short period of time" and this is not what we want in a customer...
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#2085923 - 06/29/16 05:27 PM Re: Does physical check trump mobile deposit? Rollerman
John Burnett Offline
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One bank I know that still has a comparatively low number of mobile deposits includes in its mobile banking instructions a requirement that the check be indorsed with "for mDeposit only with [bank name] [signature]. When an mdeposit is submitted, the bank actually looks for that indorsement and won't accept the mdeposit without it.
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#2085945 - 06/29/16 06:24 PM Re: Does physical check trump mobile deposit? Rollerman
Rollerman Offline
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I really like that idea. Do you know what they do if someone fails to endorse it properly?

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#2085951 - 06/29/16 06:36 PM Re: Does physical check trump mobile deposit? Rollerman
Skittles Offline
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That's how ours are to be endorsed - or something similar. Funny, though, when we first started this product about 6 months ago we had a customer deposit their check like that - and then come into one of our branches and the teller cashed it - with that endorsement.
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#2085966 - 06/29/16 07:07 PM Re: Does physical check trump mobile deposit? Rollerman
rlcarey Offline
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Originally Posted By Rollerman
I really like that idea. Do you know what they do if someone fails to endorse it properly?


You let them know that you rejected the deposit.
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#2085970 - 06/29/16 07:11 PM Re: Does physical check trump mobile deposit? Skittles
John Burnett Offline
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Originally Posted By Skittles
That's how ours are to be endorsed - or something similar. Funny, though, when we first started this product about 6 months ago we had a customer deposit their check like that - and then come into one of our branches and the teller cashed it - with that endorsement.


Your tellers need to be trained on how to recognize such an indorsement, what it means, and why they should not accept the check for deposit if it's indorsed that way. If you've trained them, and it still happens, you have a retraining or HR action to take care of. You don't create security processes for people to ignore and get away with it.
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#2085971 - 06/29/16 07:12 PM Re: Does physical check trump mobile deposit? Rollerman
John Burnett Offline
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I admit that the security in that process is not perfect. It can be avoided. But honest people won't try. And some dishonest people won't figure it out.
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#2085974 - 06/29/16 07:25 PM Re: Does physical check trump mobile deposit? Rollerman
ComplianceMN Offline
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We require something similar. For Mobile Deposit Only, Customer's signature, and last 4 digits of their account number. If it is not endorsed properly, we reject the deposit. Since we have so few of these, we call the customer to inform them their deposit has been rejected (if we can't get ahold of them, we send a letter). We also keep a list of rejected mobile deposits so that we the customer comes into the bank to deposit it (this is the only way they can now deposit it because our mobile deposit system would recognize the check as a duplicate and will not allow them to resubmit for mobile deposit), the teller can look and see if it is on our rejected list and if it is then they can accept it. We have very few rejects for improper endorsements because we stress how to properly endorse the check in all of our marketing materials and also we have asked staff to really stress the importance of properly endorsing the check when they are promoting to customers and they have done a great job of it.

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#2085987 - 06/29/16 07:59 PM Re: Does physical check trump mobile deposit? Rollerman
Skittles Offline
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Don't worry John - training happened very quickly after that incident.
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#2085998 - 06/29/16 08:28 PM Re: Does physical check trump mobile deposit? Rollerman
tpurser Offline
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I work in a state government office. Our paper payments are drawn on the state, not a bank. We are seeing more and more instances of people using mobile deposit or ATM to deposit a check image. Later they take the paper item to a check cashing place. Whichever item is presented first gets paid. The subsequent presentment gets returned, unpaid, which is usually to the check cashing business. It sounds like there is no requirement to return the mobile deposited item over the paper. Sometimes we get the image of the paper item many days, weeks or months after the mobile deposited was done. I wish more banks would require a specific type of endorsement on their mobile deposits and follow thru with verifying it so the payee can't cash the paper. We get a lot of letters from check cashing businesses claiming holder in due course and asking for payment. We have our attorneys reply that we can only pay the item once. If Reg CC is updated to protect the bank that handled the physical check, how can we return an item that was presented to us via mobile deposit days, weeks or months ago?

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#2085999 - 06/29/16 08:43 PM Re: Does physical check trump mobile deposit? Rollerman
almbanker Offline
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What is keeping a dishonest customer using mobile deposit from [REDACTED as an inadvertent "how to" for skirting a security measure]. Without it, any kind of "for mobile deposit only" endorsement requirement isn't a guarantee that [REDACTED] t through mobile deposit and then take the check to another bank [REDACTED]. Seems to me that the bank accepting the mobile deposit should be the bank on the hook if the check is paid twice (unless the bank accepting the actual check just missed a mobile deposit endorsement to another bank.)
Last edited by John Burnett; 06/30/16 01:35 PM. Reason: Removed sensitive information
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#2086073 - 06/30/16 01:32 PM Re: Does physical check trump mobile deposit? Rollerman
John Burnett Offline
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Yes, a dishonest customer can figure out how to bypass the indorsement regimen, but we don't need to publish a "how to" in this public forum. I do agree that the bank creating the additional risk to the payment system (the bank accepting the mobile image deposit) ought to be "on the hook."

Welcome to our Discussion Forums, almbanker.
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#2086169 - 06/30/16 05:49 PM Re: Does physical check trump mobile deposit? Rollerman
LSmith Offline
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In our bank in Mobile Deposit, the customer is required to endorse the back of check with an endorsement and also "XXXX Bank Mobile Deposit". We currently look at all checks submitted through mobile deposit looking for that endorsement. If it's not there, the deposit will be rejected. Then we train out tellers when taking original checks to look at endorsements and if they see that verbiage on the back, they will refuse the check.

If the check is "on us" our 4sight system will generally catch a Duplicate; but if it gets mobile deposited and run through FED, it would be Bank of first deposit rules to apply.

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#2087268 - 07/08/16 07:52 PM Re: Does physical check trump mobile deposit? Rollerman
Ric30 Offline
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IN
Do we, as the BoFD and mobile depositor, have the right to refuse a PAID adjustment if our client deposited the original item at another bank?

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#2088095 - 07/14/16 07:46 PM Re: Does physical check trump mobile deposit? Rollerman
madukes Offline
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I don't think you can refuse a PAID adjustment. The paying bank has the option of deciding which presentment to claim for the adjustment (per the fed). At our bank we typically try to go after the mobile deposit (so that bank is aware their customer is double dipping and hopefully turns this service off). If the time between the two deposits is too long, we go after the recent one. Same situation in reverse. If we get a PAID case from the fed and our customer deposited the item remotely we turn off their service unless they can provide a valid explanation as to why it occurred (sometimes they call us to tell us they did it by mistake). A notation is made on the account about the instance. If it happens a 2nd time they are cut off. We use a service through our check processor which identifies duplicate items (within a certain time frame) and pulls the item before it goes out in the fed cash letter. If, after review the item is determined to be a duplicate we debit the funds back from our customer's account. If the item is not an actual duplicate then our check processor sends the item out with the work of that day. We've cut down significantly on the number of PAID cases that come into us. Typically the ones we still get are where the serial # was misread on one of the items or it is a long time between the two deposits (I believe 6 months or longer).

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