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#2212049 - 04/25/19 01:13 PM Mobile Deposit Fraud & Reg E Compliance
bcompliance Offline
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Joined: Sep 2014
Posts: 1,246
We offer a product that has no monthly fee when the customer enrolls in estatements. When a customer attempts to deposit a fraudulent check through mobile deposit, the current practice is to delete that customer's online banking access. We do not give the customer notice of this most times, but branch management does call the customer to get an explanation of the situation and explains that we deleted their online banking access at that time. Our account disclosures state that we must give a 10 day written notice prior to cancelling the eStatement. It mentions nothing about instances where fraud is present. I understand that this is a also a UDAAP risk since we are not doing what the disclosures say.

Would this be a situation where we should be giving the customer a change in terms notice since they will be charged a fee due to their estatement going away (1005.8(a)(I))? Do others have language in their disclosures stating that when fraud is present, this 10 day notice doesn't apply?

My recommendation was to switch the user's online banking access to read only instead of deleting the access all together or close the account since they are committing fraud. Like most recommendations I make, I'm not sure it will get through to the decision makers. I appreciate any input.
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#2212052 - 04/25/19 01:21 PM Re: Mobile Deposit Fraud & Reg E Compliance bcompliance
ahkcompliance Offline
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Joined: Sep 2008
Posts: 2,470
Midwest
We haven't experienced much fraud through mobile deposit but the few times we have we take away the mobile deposit function (seperate function we can turn on/off through online banking) and make online banking inquire only where no transactions can happen but they can still see the account and access e-statements, etc.

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#2212053 - 04/25/19 01:22 PM Re: Mobile Deposit Fraud & Reg E Compliance bcompliance
bcompliance Offline
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Joined: Sep 2014
Posts: 1,246
this is leading me to believe we don't need to give the customer the 21 days for change in terms:

(2) Prior notice exception. A financial institution need not give prior notice if an immediate change in terms or conditions is necessary to maintain or restore the security of an account or an electronic fund transfer system. If the institution makes such a change permanent and disclosure would not jeopardize the security of the account or system, the institution shall notify the consumer in writing on or with the next regularly scheduled periodic statement or within 30 days of making the change permanent.

Official Interpretations of this section.
8(a) Change-in-Terms Notice
1. Form of notice. No specific form or wording is required for a change-in-terms notice. The notice may appear on a periodic statement, or may be given by sending a copy of a revised disclosure statement, provided attention is directed to the change (for example, in a cover letter referencing the changed term).
2. Changes not requiring notice. The following changes do not require disclosure:
i. Closing some of an institution's ATMs;
ii. Cancellation of an access device.
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#2212056 - 04/25/19 01:47 PM Re: Mobile Deposit Fraud & Reg E Compliance bcompliance
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,637
Galveston, TX
A customer deposits a fraudulent check and you only take away mobile access?? The account should just be closed and be done with them. Depositing fraudulent checks into an account is not limited to mobile deposits.
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#2212058 - 04/25/19 01:52 PM Re: Mobile Deposit Fraud & Reg E Compliance bcompliance
bcompliance Offline
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Joined: Sep 2014
Posts: 1,246
Randy, you are preaching to the choir. When we had the initial meeting for mobile deposits, I suggested closing the customers accounts after they attempt to deposit a fraudulent check and everyone in the meeting was laughing except me.
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#2212061 - 04/25/19 02:00 PM Re: Mobile Deposit Fraud & Reg E Compliance bcompliance
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,637
Galveston, TX
Then you are violating your E-Sign agreement. Whether you disclosed the fee for the account without E-statements from account opening would be the key to whether an adavance notice would be required. You are quoting Regulation E - that has nothing to do with assessing a fee on an account for not having E-Statements, that would be Regulation DD.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2212067 - 04/25/19 02:32 PM Re: Mobile Deposit Fraud & Reg E Compliance bcompliance
bcompliance Offline
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Joined: Sep 2014
Posts: 1,246
The account disclosures state "to avoid the $ monthly service charge fee, you must enroll in estatements".

Going forward, we will be turning off the mobile deposit capability if the customer attempts to deposit a fraudulent item (their stance is the are quasi innocent and are a victim). If the customer indicates that they gave out their online banking credentials, we will remove their mobile deposit capabilities and reset their online banking access, prompting them to re-enroll.
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#2212082 - 04/25/19 03:06 PM Re: Mobile Deposit Fraud & Reg E Compliance bcompliance
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,637
Galveston, TX
Well, if that is how you disclose the fee, then they did enroll in E-Statement. Nothing says that in order to avoid the fee that the enrollment must continue. You just need to enroll.

Sounds like a UDAAP in the making.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2212128 - 04/25/19 05:20 PM Re: Mobile Deposit Fraud & Reg E Compliance bcompliance
bcompliance Offline
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Joined: Sep 2014
Posts: 1,246
Is disclosing this properly going forward (and re-disclosing to current customers in these products) enough? or do we need to determine how many customers were effected by the fee and refund the fees?
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