At one time, fraud involving mobile Remote Deposit Captured checks (RDC) was an easy scam for those looking to take advantage of a system loophole within the new technology. In short, they used the system's initial design limitations and gaps in the framework to double-dip on the same check. After using RDC to add money electronically to their account, the scam-artist would then also walk into a branch - or any money cashing location - and get actual cash for the same check. They took advantage of the small window of time when the bank or credit union's system had yet to catch up electronically to record the transaction containing the check's initial deposit. As simple as it sounds to outsmart the system, ultimately many of these 'ingenious' scammers got caught, as they often used their own account to deposit the money. Brilliant!? Not so much.
In the year or so following the initial introduction of this convenient mobile banking technology, the amount of fraud resulting from these transactions was by far the highest proportionally of all fraud categories. According to one study, 72% of a financial institution's fraud could ultimately be attributed to remote deposit capture and fraudulent check processing. These figures are now a few years old, and these numbers have dropped off as credit unions rose to the occasion and incorporated fraud prevention techniques into their infrastructure. In fact, a recent survey showed that 75% of financial institutions reported no losses attributable to remote deposit transactions.
What tools are in a credit union's arsenal when they are looking to prevent fraud and protect its members? The answer lies in your credit union's core technology mobile banking provider. With the growth of mobile banking and high member expectations for convenient member services, many credit unions have begun to offer RDC, and other similar technologies through their mobile banking apps. RDC is just one example of the simplification of a routine digital banking feature that has drastically changed member behavior and lessened the need for staff to take care of everyday transactions.
Fraud prevention measures should be incorporated at all transactional levels, including RDC transactions. Ensure your core data processor provides up-to-date fraud prevention capabilities. After all, the fraud losses typically come out of your pocket, not your technology partner's. Checks processed through RDC and check processes in-branch should be unified by using the same check21 system and the same cash letter. By unifying in-branch teller capture and RDC, built-in duplicate deposit scanners can cross check the cash letter and verify the check hasn’t already been processed through a different channel, ensuring the check is processed only once.