Member service over fraud losses?

Credit unions face a tough decision regarding the popular remote deposit capture–accept more fraud losses or make a policy change that could impact member service.

RDC, a service provided by many credit unions that provides extended reach, allowing them to compete more effectively against banks and their many locations, is being affected by a change to Regulation CC that takes effect July 1.

The new rule addresses the issue of individuals depositing a check twice, first via RDC and then a second time by cashing the paper check, typically at a check casher. The decision all FIs face under the new rule is whether to require a new check endorsement policy that will likely upset some consumers and add a level of frustration to what has become a very convenient service, or accept losses when a check is deposited twice.

“What has become a problem for the check-cashing industry is that when a financial institution receives a check deposited via RDC and receives settlement, and later the paper check is presented at a check cashing location, or any other financial institution other than the issuing bank, that second business gets the check returned and has no means of recovery for the loss,” said Lou Grilli, director of payments strategy at Trellance.

 

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