Duplicate Presentment

We have a situation where our customer made a mobile deposit of checks and then presented the checks at another bank. The checks were deposited at different times. We got some back last week and getting some back today. What are our options? Do we have to take the liability since we were the bank of first deposit?

are the checks written on your bank? or did the payor bank return them to you as duplicate presentment? paying bank can choose which duplicate to return.

The checks are off the bank that sent them back as duplicate presentment. She deposited some of them by mobile deposit in April and we just got them back as duplicate presentments June 1st............We believe we are bank of first deposit but they didn't go thru Fed so we can't prove it. Fed said that only that bank would know for sure.The other bank sent them back to us as returns so we are going to file late return adjustments and see what happens. We believe the returns were past the 2 day period of time they should have sent back to us. We called the customer and she said it was the other banks fault and promised she would bring us the money which is now over $1000 but she has failed to come in both times she said she would. We were going to see what the outcome of the adjustments will be and go from there.

One of the checks came back as stop payment.......we don't have any recourse on that one other than getting the money from the customer right?

It's always a bank's fault isn't it? Oh, you deposited via mobile two months ago at ABC Bank and then physically deposited at my bank yesterday? My bad.

Unless the checks that were deposited via mobile had a restrictive endorsement on them, i.e. "For Mobile Deposit Only", then you really don't have a recourse as the paying can choose who to return them to, as Happy said. The general thought is that this will alert the mobile depositing bank to their client's activity.

Ok, yeah, we just require "For Deposit Only" which we are quickly changing!!!!! This was the first time we had this situation but we haven't had mobile deposit but for a couple of years.

Thanks!

The check that came back as a stop payment can be treated as a late return if it was not returned by the paying bank's midnight deadline.

Regardless of the outcome of your claim against the paying bank, please recognize that the blame for this situation falls squarely on your customer. This is not a customer worth keeping even if you are made whole.

The Federal Reserve's Reg CC amendments, effective next July 1, will help clear this mess up a bit. Banks accepting any form of remote-capture deposits, especially mobile deposits, will start imposing and enforcing an indorsement requirement something like "For mobile deposit to XYZ Bank [account number], Signature of depositor." Banks that take a paper check for deposit that doesn't have a restrictive indorsement like that to another bank will have a claim on a bank that accepted the check earlier via mobile deposit (without indorsement), assuming they can identify who that other bank is. The claim will be under an indemnification provision and will be for any losses sustained because the paper-check-deposit accepting bank was unable to charge the check back to its depositor.

So, all you mobile deposit accepting banks out there, how would a bank that got stuck with a charged-back paper check (reason: duplicate presentment) be able to track down the bank that first accepted the check in a mobile deposit? Is the only source of information a cooperating paying bank that has the records showing the source of the first presentment?

If the PAID case is submitted to you through the fed; the fed advice will let you know that you are the source of both items (if applicable) or the source of one of the items and will give you the cash letter date and routing number of the bank that is the source of the other item. You could tell by the advise if you were the first or second presentment of the item and of course the paying bank can file the claim with either party - it is not required to go after the first source (sometimes the two deposit dates can have a large gap in between - we've had them come through a year or so apart).

Some of the Fed's process may be changed when the new indemnity provision becomes effective, and the indemnity won't be valid longer than a year.

I know for now that we can't submit an adjustment to the fed that is a year old; the response would be to "deal direct" with the other bank; nor are we able to get information from the fed for anything that is more than a year old.

We tried to send the checks back as dual presentment and received provisional credit by the Fed but it was withdrawn so we have to eat the charges on all of the checks. These checks didn't go thru the Fed because the other bank was within our region. We are now going to change our endorsement on mobile deposits and file a police report against the customer. The customer has promised 3 or 4 times to bring the money but hasn't and keeps trying to use the account to pay items by ACH. We have charge off her account. Lesson has definitely be learned!

Thanks to everyone that helped!!!

John- can we make the change for the endorsements now? Or do we have to wait?

By all means, I encourage every bank that accepts mobile deposits to require a conforming indorsement -- something like "For Mobile Deposit Only to [BANK NAME], Signature, account number." I'd not insist on the account number -- some folks really hate including their account # in their indorsement out of concern for privacy. The sooner the better, since even before the regulation change is effective, it can be a good reminder that a check has already been deposited for those who are forgetful or careless and a deterrent to those who might lean toward the dark side.

If your bank actually takes the time to look at images proposed for deposit before approving them, this indorsement standard can be somewhat enforceable. Of course it's not foolproof if you have a customer bent on fraud.

Bump

Every bank offering mobile deposits or remote deposit capture should consider this advice now:



At the same time, all banks should consider reverting to the days of yore when tellers actually looked at indorsements when accepting items for deposit. If a paper check offered for deposit carries the indorsement above it's a major red flag to the depositary bank.

The changes to Regulation CC have more to do with controlling check losses than they do with consumer protection. Consider BOL's upcoming webinar. It should pay for itself.