Payments is a business fraught with risks, not the least of which is fraud. The possibility that a check or other form of payment used in a transaction might turn out to be fraudulent has been a perennial problem for financial institutions and their customers. Fortunately, check fraud losses are down, thanks in part to technologies like remote deposit capture. Unfortunately for financial institutions and their customers, fraudsters are rarely deterred. Instead, once one avenue of opportunity is shut off they go searching for the next big opportunity, which looks to be credit and debit card data presently, if recent news reports are an indication.

The Federal Reserve reports that checks were just 3% of the 31 billion unauthorized payments banks identified in 2012; 90% were credit card payments. In terms of dollars, unauthorized checks represented 13% of an estimated $6.1 billion in total unauthorized payments identified by financial institutions. As the data indicates fraudsters haven’t exactly given up on checks. In fact, growing adoption of mobile RDC is attracting fraudsters, as we’ve witnessed with reports of frauds where checks get deposited using mobile devices and then again in face-to-face environments–i.e.: duplicate deposits.

Duplicate deposits, however, are just the tip of the fraud iceberg. Any of the many frauds common to the paper check environment—counterfeits, alterations, kiting, to name a few—remain possible in an electronic environment, in addition to new challenges. For example, there have been reports of cyber-criminals breaking into check-image data bases, generating fraudulent paper checks from the information, then making bogus deposits with their mobile devices.

Mobile RDC is a game changing product that no financial institution can afford to ignore. That’s why I’m surprised when executives at financial institutions express reservations about mobile RDC. Comments like “If only there were a way to flag bad checks in real time” and “If only I could monitor customers’ DDA activities across channels” represent barriers many see to broad adoption. Well now there is a way to flag bad checks in a mobile deposit environment, and it supports cross-channel monitoring. It’s called CheckRisk Pro™.

CheckRisk Pro is the most advanced risk mitigation platform available in the market today, and it’s the latest addition to Cachet’s risk mitigation toolkit. A Cachet-hosted solution, CheckRisk Pro takes check fraud detection to an entirely new level of sophistication. It enables financial institutions to collect, process and make decisions based on client deposit information from multiple channels (such as ATMs, branches and mobile RDC), presented as either X9 or ACH files and regardless of which vendors/solutions are used to support those channels. Applying custom rules and automated decisioning routines, CheckRisk Pro makes it possible for financial institutions to assess the riskiness of any transaction before it ever posts.

Financial institutions using CheckRisk Pro set up their own rules and profiles (like frequency and value of deposits, consumer versus commercial checks, exceptions handling), reporting requirements and triggers for manual intervention.  CheckRisk Pro takes over from there: applying rules and variables (individually or grouped into profiles), tracking performance and streamlining exceptions handling. CheckRisk Pro can also track operational and performance metrics, and generate custom reports and metrics.

Mobile RDC is the hottest product to emerge from the financial services sector in a very long time. But like any financial transaction, mobile deposits carry risks. We as an industry need to take a proactive approach to identifying fraudulent transactions, or we risk losing the advantages mobile RDC provides. Solutions like CheckRisk Pro are important to this outcome. So, too, are many of the business practices that have been of paramount importance to banking for generations—concepts like “know your customer.” In fact, these practices assume even more importance when there is little to no face-to-face interaction between a financial institution and the customer, as is the situation with remote deposit.

Recently Cachet published a white paper discussing basic best practices for managing fraud and related risks in a mobile RDC environment. I encourage you to download the white paper here

Check fraud has been and continues to be an unrelenting burden to financial institutions and their customers. Mobile RDC doesn’t eliminate check fraud. But with solid technology solutions, like CheckRisk Pro, and strong adherence to best practices, financial institutions are positioned to contain check fraud thereby empowering them to leverage mobile RDC to ultimate advantage.