Photo (cc) by CarbonNYC [in SF!]
Can someone cash more than once a check you’ve written? Yes, thanks to the intersection of very old and very new banking technology. It was impossible until recently – payees formerly were required to hand paper checks over to banks during a deposit. But with mobile banking, some experts predict “double presentment” will soon be the source of a new wave of fraud. And if you don’t know about it, even if you don’t use mobile banking, you might have to foot the bill.
It happened to Louise Moon Rosales of Vermont. Twice in the past year, she wrote checks to pay for small services such as yard work. Both were cashed … and then cashed a second time a few months later. Her bank honored both payments. For example: a $100 check she wrote to a high school student for yard work was cashed in December and then again in April. How?
The student used a new, popular checking account tool called “remote deposit capture” — he deposited the check with his cell phone. Check recipients who do that get to keep the paper check, rather than hand it over to a teller or an ATM. That means the check can be deposited a second time, a problem known in banking as “double presentment.”
“I totally could have missed it,” Rosales said. “If I didn’t use Quicken I would have. … I use online Quicken to reconcile the accounts, and that is how I found it.”
It seems almost too simple: criminals depositing the same check multiple times. But with banks racing to offer remote deposit capture and mobile banking ahead of the competition — some analysts think half of all retail deposits will use the technology by next year. That means they are beginning to favor speed over safety.
And there’s another element that makes mobile banking ripe for the next wave of fraud, predicts analyst Shirley Inscoe of Aite Group. With EMV credit cards equipped with computer chips finally becoming a reality in the United States, eliminating one popular kind of fraud, criminals will aggressively hop to another technique to replace lost income.
“I predict that organized fraud rings, which will be actively looking for new targets as EMV becomes more fully implemented, will discover (mobile remote deposit capture) in a big way,” she said.
Spotting fraud takes time, and using fraud-fighting technologies is always a balancing act of convenience vs. security. It seems logical that a bank would quickly scan check numbers to make sure the same check hasn’t been deposited before, but for small dollar amounts, even that level of delay can be seen as unnecessary. Still, banks have historically been good at catching double presentment at the same institution using the same channel — the same check deposited twice using the same mobile phone, for example — says analyst Bob Meara of Celent.
But if criminals use different channels — first time on a phone, second time at an ATM — that gets a little trickier.