Page 19 - GS170601

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depending on whether the paying bank is local and other multiple times, either accidentally or as part of a fraud
factors. Under current regulations, when checks being scheme. The system has not been awash with duplicate
returned are for amounts of $2,500 or more, the returning checks – RemoteDepositCapture.com, for example,
institution also must provide a notice of nonpayment to reported a duplicate loss rate of 0.031 percent (about 3
the presenting bank within two business days. out of every 10,000 RDC items) among banks and credit
unions offering RDC in 2016.
One amendment set forth last month establishes a
hard-and-fast rule that a check return (whether paper This compares to an overall return item rate of 0.4 percent,
or electronic) must arrive at the institution that first or 40 out of every 10,000 checks processed through the
accepted the item by no later than the second business day Fed's clearing network. Nonetheless, concerns continue
following presentment. The Fed also raised the threshold to be raised about the risks and legal liabilities that arise
for required notices of nonpayment from $2,500 to $5,000. when checks deposited using RDC are deposited again
using RDC or some other means. So the Fed has added a
RDC and duplicates new provision to Reg CC that addresses these situations.
Remote deposit capture (RDC) has been a big hit with
consumers and businesses. Consumers primarily are The new provision indemnifies a bank or credit union
attracted to the convenience of making deposits using that receives a deposit of an original paper check that
desktop scanners and/or smartphones rather than visiting is subsequently returned unpaid because it already had
branches or ATMs. Businesses, too, like the convenience been accepted as an RDC item and paid. The indemnity,
of RDC, but are also drawn to the operational efficiencies however, does not apply if the check contains a restrictive
and cost savings that arise from migrating labor- and time- indorsement, such as "for mobile deposit."
intensive paper collection protocols to digital methods. Opening e-check floodgates

Despite the popular consensus, some experts assert that The proliferation of RDC and related technologies has
RDC creates new risks for financial institutions, such as created significant interest among banks and businesses
the risk a check deposited using RDC might be deposited in extending the digitization of checks from simply

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