Online and mobile banking has nearly eliminated the need for customers to ever visit their banks. One of the most recent advances is mobile remote deposit capture (mRDC). Commonly known as mobile deposit, this feature allows customers to use their smartphones to take an image of the check and deposit it via the bank’s mobile app. While this technology has been welcomed by most consumers, the convenience comes with some risks. Our friends at Bankrate have previously discussed 3 ways that mobile deposit can burn you, but our counselors have identified four additional dangers when using mobile deposit.
1. Rejected deposit
When a deposit is rejected, it is usually because the image did not meet visual specifications or the information on the check is missing or incorrect. Many times this problem is corrected by simply snapping another picture of the check and re-submitting. However, the rejected deposit can lead to financial loss if you are not diligent about checking the account and notifications. If you fail to notice the rejected deposit, it’s possible that the funds will never be deposited. The funds could then easily be lost if you do not balance your account, especially if it is a small deposit. A 2014 study by The PEW Charitable Trusts stated that banks “inadequately disclose whether they provide [status] alerts.”
Mobile deposit also has a potential security flaw if you are not diligent about the proper storage of deposited checks. It is important to keep the check in a safe place to prevent the account information from falling into the wrong hands. For instance, if you are on the go and use mobile deposit from your car, the check shouldn’t be stored in your glove box. If your car is broken into, it could allow the thief to abuse the banking information of the check’s accountholder. If it’s determined that you were negligent with the check, you may face legal problems as well.
Re-depositing happens when you or someone in your household doesn’t remember or realize that you already deposited the check via the mobile app and does it a second time. If this happens, you should expect a returned check fee, which averages about $30 according to Bankrate. According to the bankers we talked to, this is actually the most common issue with mobile banking. Some customers have even been accused of fraud, so this is something you really want to avoid. Good recordkeeping and marking the check as deposited are the keys to avoiding this problem.
At least one major bank charges a fee for using mobile deposit. While most banks disclose some of the terms and conditions for using mobile deposit, including the costs, enrollment requirements, deposit limits and posting policies, the PEW study found that only one institution disclosed all of them. Be sure to familiarize yourself with your bank’s policies and ask questions before using their mobile services. This can also be a good opportunity to compare mobile apps, fees and services across banks to see if it’s time to switch to one that better fits your needs.
Alternatives to consider
When possible, have your payer use direct deposit or bank-to-bank transfer. If the payment is from an individual you trust, they could even make an online payment directly to one of your credit or utility accounts using their banks’ online billpay. If it’s not out of your way, consider continuing to physically deposit checks at your bank or credit union’s branch or ATM. And, if you belong to a credit union, see if they are a member of the CO-OP, which allows banking privileges at shared branches and ATM’s.
If you choose to use mobile deposits, that’s okay, but just be sure to fully understand the risks and do everything in your power to minimize them. For more budgeting tips and tools, contact a Clearpoint counselor today!