Blog

Is mobile RDC fraud on the rise?

November 21, 2013 by Jim Ghiglieri — Senior Vice President, Corporate Communications, SHAZAM

Mobile remote deposit capture has become one of the most sought-after mobile banking app features. Celent research found that financial institutions are answering consumer demand by adding MRDC to their product offerings: In 2009, 72 percent of FIs surveyed did not plan to offer MRDC. By 2012, 82 percent did intend to provide MRDC service.

Thus far, FIs have been fairly successful at warding off MRDC-related fraud. Celent data indicates that approximately 90 percent of FIs offering MRDC reported zero losses in 2012. Unfortunately, growing consumer interest and more widespread use increases the potential for fraud.

Oklahoma City business Paris Limo recently experienced a case of MRDC fraud. An employee double- and triple-dipped by depositing the same paycheck into two or three different checking accounts, ultimately stealing $15,000 from his employer.

One measure FIs are employing to prevent MRDC fraud involves setting velocity controls, including daily deposit limits. This provides a measure of protection against a single devastating loss.

FIs will be monitoring closely for incidents like the one in Oklahoma City, as well as another MRDC fraud carried out in Louisville, Ky.:

In June, Louisville resident Boma Robert Spero-Jack was accused of using MRDC to deposit Western Union money orders into a Bank of America account, while also cashing the same money orders at multiple Kroger supermarkets. Considering how Spero-Jack's $12,620 double-dipping scam was spread out — 32 money orders between $195 and $500 — it's clear that velocity controls alone aren't enough to stop this type of crime before it gets off the ground. Additionally, using multiple bank accounts would render daily deposit limits ineffective, or at least less effective.

Funds availability limits are another potential line of defense for FIs. Even if Spero-Jack had gotten away with double dipping, if he had been unable to withdraw the funds from his account, most of the losses would have been prevented.

However, with federal regulations making many checks subject to partial immediate availability and next-day availability, fraud attempts like Spero-Jack's would still get through.

Duplicate detection tools, which alert FIs to duplicate deposits can be effective in some cases, but only if the double-dipping attempt is made at a single institution. This technology is most useful for detecting accidental duplicate deposits, such as when an individual doesn't realize his or her spouse has already deposited the check.

Ultimately, velocity controls and duplicate detection tools are not foolproof, and fund availability limits can be tricky to employ. This brings to the forefront one last, admittedly old-fashioned security blanket for FIs — getting to know your customers and deciding whom you can trust.

About Jim Ghiglieri

---

None

Connect with Jim: