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Remote Deposit Capture to Deposit Same Check

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We have seen customers commit fraud by using remote deposit capture to deposit the same check at multiple banks, by using the same image of the check front but different check backs in order to use multiple restrictive endorsements. Under Reg CC or the UCC, what is the best way to argue against another bank that their claim is legitimate and ours isn’t? Both banks have an image with their restrictive endorsement, and theoretically the captures could have been made within a short amount of time. How can we defend ourselves from being left holding the bag?

The restrictive endorsement under Reg CC only protects the bank from a claimant who takes a loss due to the paper check being presented a negotiated with the restrictive endorsement on it. For multiple image presentments, the drawee bank picks which institution(s) to send the checks back to.

This is the risk of offering this product and why institutions set limits for the volume and/or dollar amounts as well which customers to which they will offer this product.

First published on 05/10/2020

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