U.S. financial institutions have been warned of the potential for rising fraud rates from the expansion of remote deposit capture technology to the retail and unbanked sector.
In a post on the Federal Reserve Bank of Atlanta’s Portals and Rails blog, Douglas King, payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed asks whether the expansion of remote deposit capture into new customer and payment markets and new hardware devices such as mobile phones raises the risk of rising fraud rates.
To date, banks and other financial institutions have successfully managed risks for commercial RDC services, whether by restricting the use of the service to only highly-vetted commercial clients or limiting the value of allowable remote deposits.
USAA, JPMorgan Chase, PNC Bank, and US Bank all now offer mobile RDC for retail consumers, while Bank of America is targeting a second-quarter 2012 launch for its retail mobile RDC service.
“With banks and financial institutions expanding this service to a retail customer base that often undergoes less stringent due diligence than do their commercial customers, is the potential for fraud increasing?” asks the Atlanta Fed’s King.
As mobile banking adoption continues to increase, the use of RDC (Remote Deposit Capture) will grow as well. Such growth will increase the likelihood that fraudsters will try to make duplicate deposits at different institutions using the same check image, or alter images and try to make fraudulent deposits based on the base image. Countermeasures include the use of software that searches for duplicate check numbers and transaction amounts, and check numbers out of range.
With this growth comes the responsibility for FIs to increase their risk management and fraud detection efforts to counter the potential for increased occurrences of fraud via RDC.
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