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Mobile remote deposit capture is radically changing the competitive landscape for financial services, particularly competition for Millennials. This is good news for cost-conscious banks and credit unions, as mobile deposits are significantly cheaper to accept than in-branch deposits. Of course, there is a downside to consider: criminals, intent on undermining the integrity of the financial system, are always on the lookout for new ways to defraud companies and consumers. The opportunity exists, however, to get out in front of this potential onslaught of fraud with better information sharing within and between financial institutions and solutions providers.

Although mobile deposit fraud has not been a disruptive problem to date, some experts warn that U.S. adoption of a new credit and debit card security protocol, known as EMV, will prompt criminals to look for new fraud opportunities. Given its growing popularity, some experts warn that mobile deposit is attracting attention from fraudsters.

EMV is an encryption standard intended to curtail the use of counterfeit credit and debit cards, which is estimated to be a $3 billion a year source of fraud losses. Most card-accepting devices are supposed to be capable of supporting EMV by this October, forcing fraudsters to seek out fraud opportunities, like card-not-present and mobile check deposit transactions. The proliferation of smartphones—6 out of 10 Americans now have them, according to the Federal Reserve—offers fertile ground for fraudsters. It’s just a matter of time before they step up fraud attempts that take advantage of mobile deposit.

The risk of fraud is always present in banking; it will never go away completely. The best we can do, as an industry and as individual organizations, is erect barriers to fraud and continuously refine those to keep pace with the changing nature of fraud.

The mobile channel brings with it entirely new ways of thinking about deposit fraud, and requires multiple layers of protection in the form of policies, procedures, processes and technologies. In fact, fraud prevention and detection needs to begin long before the first mobile deposits start coming in, even before customer onboarding.

Smartphones have become 21st century check scanners. Certainly no bank or credit union would install new scanners without first ensuring the devices could stand up to the rigorous demands of check processing. Well, neither should they offer every smartphone-carrying customer the same mobile deposit privileges. Customer vetting and segmentation routines, as well as hands-on training, can help protect against fraudsters gaining mobile access. But even more must be done.

The simple fact is that anyone with a smartphone and the necessary credentials can try to pass fraudulent checks through customer accounts. That’s why Cachet has integrated geo-fencing technologies into our mobile deposit solution. Geo-fencing enables institutions to restrict acceptance of mobile deposits to defined geographic areas that are associated with specific customers.

Additional fraud-fighting enhancements to Cachet’s Select Mobile™ Deposit solution can be deployed to further authenticate check deposits by verifying that signatures and endorsements are present and conform to customer rules and practices. Select Mobile Deposit will also be integrated soon with Advanced Fraud Solutions’ TrueChecks™, a national database of counterfeit check activity. As a result Cachet’s clients will have the capability to run mobile check deposits against all deposit channels in real time, thereby protecting against potential duplicate deposits.

Deposit fraud is a multi-channel problem that demands multi-channel solutions, instead of the silo-specific solutions that have dominated fraud detection to date.  Fraudsters prey on the fact that information sharing today is limited, within and between financial institutions. Now is the time to set that paradigm on its head. It is time to undertake a truly cooperative approach to combatting fraudsters through more and better information sharing internally, with competitors and with solutions providers. Failing to do so will only serve to incite fraudsters and diminish the value proposition mobile deposit offers financial institutions and their customers.