If your institution is experiencing an increase in check fraud - as many are - chances are some of those losses are coming through your Remote Deposit Capture (RDC) service. How can you prevent, or at least reduce, these losses?
First, let’s consider: why the sudden increase? Conversations with member institutions on ePayResources’ Payments Answerline™ and in our Fraud Reduction Meetings lead me to believe it is not a result of deficiencies in the RDC services or platforms themselves.
Contributing Risk Factors
There are several contributing factors, the first of which is online account opening, a widely available option among our members. Fraudsters love the anonymity provided by online or remote services because it is impossible to know with 100% certainty who submitted that application for services. Despite rigorous customer identification programs, we know fraudsters can still manage to get in the door via remote channels.
Sharing access devices and credentials is also to blame. Sometimes an accountholder does not realize the check they agreed to allow their “friend” to deposit is altered or counterfeit - or maybe they do. The accountholder may unwittingly be coerced to act as a money mule or may willingly play that role.
Controlling the Risk
Has your institution considered these measures to reduce the opportunity for RDC fraud?
- Establish qualifications, like length of time the account has been open, for which customers or members are eligible for access to RDC.
- Establish tiers of service, including lower dollar amount thresholds and fewer allowable deposits per month for new users.
- Establish strict rules for the types of checks accepted via RDC. For example, no third-party checks, no U.S. Treasury checks, and no postal money orders.
- Require restrictive indorsements.
- Limit immediate funds availability.
Of course, restricting types of checks and requiring restrictive indorsements mean someone must review all items to ensure these rules are being met. If your RDC volume is so great that review of all items is not feasible without additional resources, you could establish a minimum dollar amount over which deposits must be reviewed. There are technology solutions you may also wish to explore to help you manage RDC risk.
Identifying and understanding the types of items and accounts associated with RDC loss at your institution is the first step in putting protective measures in place. Start by reviewing and documenting the sources of your RDC losses, e.g., types of checks, new vs. established accounts, dollar amount, and online vs. in-person account openings. Itemize your total RDC losses to be used in a cost benefit analysis when researching technology-based solutions or considering the addition of staff.
How We Can Help
Don’t forget the vital role of internal education in risk reduction! ePayU, our 24/7/365 on-demand learning platform, contains a number of RDC-specific sessions, like Remote Deposit Risk and RDC Risk Assessments & Real-Life Findings, most available to our member financial institutions at no cost as a benefit of membership.
A broader foundation in check knowledge can also be obtained in ePayU or by completing ECCHO’s National Check Professional (NCP) certification program. Our virtual Check Systems Investigations workshop, offered in September each year, provides the essential understanding of the laws, regulations, and rules for check clearing and settlement that every institution needs to know. Search all our education offerings at epayresources.org.
Our Fraud Reduction Meetings are a free benefit of ePayResources membership that provide an opportunity throughout the year for you to network in person or virtually with your peer institutions to discuss the fraud you are experiencing, how to prevent it, and how to mitigate the impacts. RDC fraud is often a topic in these valuable meetings. These types of conversations also take place in our online Fraud Forum Community.
If you are experiencing fraudulent cashier's checks drawn on your institution, members can request a Fraud Alert to warn peer institutions.
If you need help assessing the risk associated with your RDC program, ePayAdvisors can help by performing a Mobile Deposit Capture Risk Assessment. This service identifies the associated risks, determines if controls in place are sufficient to mitigate these risks, and recommend methods that can be implemented to further reduce risk for your institution. Learn more at epayadvisors.com.
As your payments association, ePayResources is here for you to support the quality, safety, and efficiency of your payments business. Please reach out to our accredited experts on the Payments Answerline™ at 800-475-0585, Option 1 if you have any questions.