Do you remember going to the bank as kid? I do. I remember walking into the bank with my parents (or, on an even better day, utilizing drive-thru banking and watching that amazing tube thing transport cash and documents between the teller inside and my parents’ car — I thought that was so cool). I’d watch intently as my parents endorsed checks, handed them over to the teller, and then got actual cash in return. The whole thing fascinated me.
Fast forward a few decades. Today, our paychecks are deposited directly, and any other check that’s written to us can be deposited using a smartphone. Banking looks really, really different — so different, in fact, that three of my four children have rarely, if ever, stepped foot inside an actual bank branch (or sat in the line outside)! I never go to a bank anymore for small personal needs. If I utter the phrase, “I need to deposit this check,” my littlest one goes running for my phone. The whole concept of banking is radically different than it used to be.
The convenience of mobile banking is astounding and, by and large, a pleasure. But the dark side to it all is a new wave of “double presentment” fraud plaguing banks and businesses. What used to be impossible, cashing a check twice, is now possible thanks to a lack of communication between old and new technologies. It’s something you need to be aware of, even if you don’t personally utilize mobile banking.
Cashing the same check twice
The situation goes like this: A person receives a check from you and deposits it using the mobile banking app on their phone. Then, several months later, still in possession of the paper check, they take it to a branch or an ATM and cash it again. Bank technology is really great at catching double presentment at the same institution when the same method for deposit is used — the same check deposited twice using the same mobile phone, for example — but it’s terrible when someone uses multiple methods of deposit (first the phone and then the ATM). And then there are the cases of people cashing checks using multiple methods at multiple banks, which is even harder to catch. Most banks’ review mechanisms are powerless to identify and reject items that have been previously deposited at other financial institutions. Either way, here’s the rub: As the payer, your checking account can get dinged twice for the same exact check. For small businesses on a tight budget, it can be a real issue.
Lack of security
When mobile banking was new, banks were very judicious about granting remote deposit privileges to account holders, and that kept fraud rates very low. Tenure with the institution, deposit history, and average daily balances dictated which consumers or businesses were granted mobile deposit eligibility. But demand for mobile banking quickly increased, and those denied the privilege at one bank simply packed up and took their business to another, where security was lower. That pressure to accept remote deposits from anyone (and for any amount) left banks racing to compete with each other to offer mobile services, and they favored speed over safety in the process. It’s only logical that fraud ensued.
The Consumer Financial Protection Bureau has compiled tips for consumers using mobile banking services, such as setting up balance alerts and frequently checking account balances. But even if you don’t use mobile banking, you can be a victim. All it takes is an old-fashioned check written by you. Do not rely on your bank’s technology to catch errors. Be vigilant, checking account statements very carefully for multiple drafts of the same check.
If you do spot double presentment, call the bank immediately. You can initiate a dispute and have the money refunded to you. Depending on the amount, the bank may wish to pursue to the perpetrator of the fraud. Your hands are tied at that point, but at least you’ll have your money back — and know which dishonest person or company to avoid in the future.