Financial institution executives have grumbled for several years about persistent fraud in mobile remote deposit capture.
Now, the San Diego-based Mitek, which owns many key MRDC patents, has announced the availability of tools designed to reduce fraud in the channel.
Called Restrictive Endorsement, the service will be made available to financial institutions, generally through Mitek resellers starting Nov. 3, Sarah Clark, Mitek vice president, said.
The tool takes dead aim at a problem that had been identified as crucial: When a member deposits a check via MRDC, then takes the paper check to a check cashing store and double dips, Clark explained.
Generally, financial institution will suffer the loss. Because the check cashing store has the paper check, it will typically get the money.
Under Restrictive Endorsement, Mitek has urged financial institutions to require MRDC users to endorse a check with specific language such as for mobile deposit only or for mobile deposit only at XYZ Credit Union.
With that endorsement, a check cashing store would typically decline to accept the check, Clark said.
Mitek said it has written an algorithm that is able to quickly check a deposited item for the prescribed endorsement. A credit union could choose to reject all items lacking the endorsement or forward items for human review, according to the company.
Clark also said every deposited item will be graded by Mitek for its risk level.
By Mitek's count, fraud in MRDC is very low, she noted.
There is no way to attach a specific number to MRDC fraud because different institutions may account such fraud differently, Clark said.
"Getting to exact numbers is challenging," she acknowledged.
As useful it may be in minimizing duplicate attempts to cash checks, the Restrictive Endorsement tool does not address the issue of mass multiple MRDC deposits by organized criminal gangs. At least one large bank, Citibank, has publicly stated this is a growing concern.
"Restrictive Endorsement is not intended to address every scenario," Clark said. "It needs to be used in conjunction with other tools."
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