CCUL Headlines: Compliance

CU Insight: Is RDC fraud a concern? Here is the solution

Wednesday, August 9, 2017   (0 Comments)
Posted by: CU Insight
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Are fraud concerns holding your credit union back from implementing technology efficiencies? Or is your credit union currently experiencing cases of RDC fraud? It’s no secret that creative financial criminals have developed several RDC scams such as the “Sweetheart Scam” and the “Fake Payday Lenders“. Another well-known scam works as follows: First, the thief deposits a check through RDC from a smartphone in the parking lot of the credit union. Secondly, they walk that same check into an MSR, who immediately cashes the funds, even though the check hasn’t technically ‘cleared’ yet.

With new technology comes new risk. Mobile banking is a necessary member service tool to ensure your credit union remains competitive. However, Remote Deposit Capture has the potential to open you up to a new kind of fraud. A recent analysis of 400 FIs found that 72% of all reported mobile banking fraud cases involved RDC and the use of fraudulent checks. With RDC fraud on the rise, it’s important that credit unions know what their options are for preventing it.  

Here are 3 steps credit unions of any size can take to prevent check fraud through RDC:

  1.  A Unified cash letter: Depending on your credit union technology infrastructure, you should have the option to unify the in-branch check-21 and RDC cash letter. Having a unified check-21 and RDC cash letter may sound like a minor tweak but it makes all the difference when it comes to preventing remote check fraud scams as described above. Disjointed cash letters allow fraudsters to deposit the same check through different avenues without flagging the fraud systems in place.
  2.  Duplicate Deposit Monitoring: Most check-21 teller capture systems have built-in duplicate deposit scans that cross check the current cash letter to verify the check hasn’t already been processed. While this is a beneficial preventative measure, the game was changed when RDC was introduced to the world. It didn’t take fraudsters long to realize that most credit unions use separate systems for RDC and in-branch check-21, allowing them to make duplicate deposits without setting off any alarms. However, as mentioned in point 1, by unifying your check-21 and RDC cash letter, the duplicate deposit scan checks not only in-branch checks but also those deposited through RDC.
  3.  Leverage Industry Collaboration: Many teller capture systems and core platforms leverage industry collaboration through a check fraud database. For example, TrueChecks® offers integration with many different check-21 systems. The TrueChecks® database is comprised of check data from financial institutions across the United States and delivers real-time responses on counterfeit, NSF, closed account, duplicate, and other fraudulent items. The fraud database cross check is virtually transparent to MSRs and TrueChecks® displays Reg CC recommended actions and an associated risk on scanned and RDC checks. Building a database like TrueChecks® into your check-21 teller capture system and RDC app, will prevent fraud before it happens.

The increasing demand for mobile RDC will only drive fraud risk upward. At the same time, this service is one of the most convenient mobile technologies members have at their fingertips. Achieving a balance between RDC fraud prevention and a quality mobile experience doesn’t have to be difficult when you have the proper technology and automation in place.


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