2017 Regulation CC Effective July 1

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The 2017 Regulation CC final rule creates a new Remote Deposit Capture Indemnity in Section 229.34(f) to address the allocation of liability when a depositary institution, such as a credit union accepts deposit of a check through "remote deposit capture." In other words, when the depositor/ member sends the credit union electronic information about a check, such as a photographic image, which the credit union uses to create an electronic check or substitute check for collection. The proposed indemnity would be provided by a credit union that accepted a check via remote deposit capture to a financial institution that accepted the original check for deposit, in the event the financial institution that accepted the original check incurred a loss because the check had already been paid.

The final rule added an exception to the indemnity, and associated commentary, which would prevent a bank from making an indemnity claim if it accepted the original check  containing a restrictive indorsement inconsistent with the means of deposit, such as "for mobile deposit only." The federal Reserve Board believed that providing this exception could reduce accidental double deposits and could provide incentives for financial institutions that receive remote deposit capture deposits to take steps to minimize intentionally fraudulent deposits.

Something to consider: If your credit union accepts checks via remote deposit capture, you may want add language to your Remote Deposit Capture Agreement (if the language isn't already there) that requires your member to add a restrictive indorsement to the check such as "For Mobile Deposit Only," or similar indorsement.

Such an indorsement may help reduce risk to your credit union.

Source:  CUNA’s Compliance blog March 12, 2018