Question of the Week
Friday, September 28, 2018 8:05 AM

Question:  Explain to me how the new Reg CC rules work in regards to remote deposit capture and subsequent deposit of a paper check.

Answer:  Paper prevails is the new standard.  So if your member deposits a check through remote deposit capture first, and then subsequently presents the physical check through another institution, that second institution would have a claim against the credit union for repayment of the check when it is returned.  By accepting a mobile deposit from a member, you are asserting that no future deposits will be made of that check.  This makes intuitive sense since you are allowing the member the privilege of RDC (and to preserve the sanctity of our physical check process). 

Now, the caveat to all this is that you can require your member to place a restrictive endorsement on the check during the remote deposit capture process.  If you do, and the member subsequently tries to attempts to deposit paper check containing that restrictive endorsement, that second institution would have no claim against you. 

So the takeaway is, if you’re allowing members to use RDC, make sure that:

1.You require your members to include a restrictive endorsement (Using language similar to “For Remote Deposit Capture only to ABC Credit Union Account ###”

2.Ensure that system is equipped to take a snapshot of the restrictive endorsement for your records, and

3.Finally, do not hesitate to suspend RDC privileges in case of abuse (which should be outlined in your agreement).