Personal Finance

What safeguard is in place to stop a cheque from being mobile deposited twice?

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  • Jan 14th, 2019 11:38 am
[OP]
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Nov 9, 2017
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What safeguard is in place to stop a cheque from being mobile deposited twice?

A paper cheque goes to regional clearing house to clear.

- What safeguards are in place with a mobile deposited cheque so that it is not deposited into two different accounts?
- Is it possible that receiver of a cheque deposits a cheque into CIBC Bank and it comes back NSF and a week later they try and mobile deposit it into TD Bank and this time it goes through because the payer has money in their account? Or does the clearing house recognize a cheque and stops it from being sent to a second bank? Is there a centralized system for it?
- Or is it so that a cheque can be mobile deposited many times and clearing house is agnostic to this and it's the responsibility of the issuing bank to approve it or not?

I would like to know from those with experience or knowledge.

Thanks,
14 replies
Deal Addict
Jan 2, 2015
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snowhite445 wrote:
Jan 11th, 2019 6:13 pm
A paper cheque goes to regional clearing house to clear.
They haven't done so in years. Now we use "truncation", or in plain English, we send a file (image or text, or both) from one bank to the other. As I'm not a banker, I can't say what their machine looks like, but I imagine it's similar to a scanner (since you can see the cashed cheque as an image/PDF for the account the cheque was withdrawn from). The physical cheque is destroyed (to keep you from doing this again and again). The system is faster than before, although it still takes a few business days for a cheque to clear.
- What safeguards are in place with a mobile deposited cheque so that it is not deposited into two different accounts?
- Is it possible that receiver of a cheque deposits a cheque into CIBC Bank and it comes back NSF and a week later they try and mobile deposit it into TD Bank and this time it goes through because the payer has money in their account? Or does the clearing house recognize a cheque and stops it from being sent to a second bank? Is there a centralized system for it?
- Or is it so that a cheque can be mobile deposited many times and clearing house is agnostic to this and it's the responsibility of the issuing bank to approve it or not?

I would like to know from those with experience or knowledge.

Thanks,
I have a little knowledge, but no experience with this. Hope this helps.

There is no system that will immediately flag the cheque. However people who routinely photo-deposit cheques say they get a result in about a half hour. Presumably the receiving bank sends the file to the issuing bank, which will send back a message saying it's valid or not. If it's not valid, your bank account will have the cheque withdrawn, and there might be a fraud hold on it. If you photo-deposited the same cheque at five different banks, you might temporarily have that money five different times in your accounts, but eventually you'd lose that money (or at least four fifths of it) and your bank accounts would be frozen. (When you photo-deposit a cheque, you are supposed to destroy it, to prevent you from accidentally, or on purpose, depositing it more than once.)

I don't know how fast this is. The cheque probably didn't actually clear in half an hour. It's possible the preliminary check (hah) is fast enough to catch such an obvious error or case of fraud.

There is a centralized system to check on these things. It's called the Automated Clearinghouse, or ACH. I don't think it's the ACH's responsibility to check (sorry) the cheques for accuracy. It's job is simply to pass the information from one bank to the other, and the issuing bank needs to tell the receiving bank if the cheque is good or not.
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I mistakenly attempted to E-deposit a cheque twice. My mobile banking app immediately informed me the cheque had already been deposited. What would have happened if I tried with a different bank the second time? I can only assume it would either be denied immediately or it would be reversed very shortly after. Either way, I have no doubt the banks have a system in place to prevent fraud. If there was any chance of them losing money, E-deposit wouldn't exist
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Was this the same app and the same bank account you were trying to e-deposit a cheque into?
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snowhite445 wrote:
Jan 11th, 2019 6:13 pm
- What safeguards are in place with a mobile deposited cheque so that it is not deposited into two different accounts?
Banks/data centers have duplicate detection systems in place that can automatically detect potential duplicates before they go out in some cases, which are generally flagged for review and rejected if they're confirmed as a duplicate.

This doesn't always work, for example when the same cheque is deposited at two different FI's. In this case, the FI the cheque is drawn on has 90 days to send a chargeback for duplicate payment to the FI that processed the cheque the second time.

snowhite445 wrote:
Jan 11th, 2019 6:13 pm
- Is it possible that receiver of a cheque deposits a cheque into CIBC Bank and it comes back NSF and a week later they try and mobile deposit it into TD Bank and this time it goes through because the payer has money in their account? Or does the clearing house recognize a cheque and stops it from being sent to a second bank? Is there a centralized system for it?
There are a few specific reasons that cheques are allowed to be re-presented through clearing - one example is if the cheque is cleared in the wrong currency and charged back, the depositing FI can process it again in the correct currency - same thing applies for wrong amount. Chargeback reasons like NSF though can not be re-presented, so your scenario should result in it being charged back as a duplicate deposit (assuming it wasn't caught automatically).

snowhite445 wrote:
Jan 11th, 2019 6:13 pm
- Or is it so that a cheque can be mobile deposited many times and clearing house is agnostic to this and it's the responsibility of the issuing bank to approve it or not?
The ultimate responsibility for charging back a duplicate is on the bank the cheque is drawn on. A data center like Symcor or Intria may have technology to help detect these things, but the end responsibility lies on the bank to make that return within the 90 days.
Last edited by cirrux on Jan 12th, 2019 7:44 pm, edited 1 time in total.
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Shaner wrote:
Jan 12th, 2019 9:04 am
I mistakenly attempted to E-deposit a cheque twice. My mobile banking app immediately informed me the cheque had already been deposited. What would have happened if I tried with a different bank the second time?
Your FI likely would have noticed the duplicate after the fact and would have 90 days to make the return. On the other end of the transaction, if you wrote a cheque and noticed it come out of your account twice and it wasn't caught by the bank, you can let them know within 90 days and they should send that chargeback to the FI that processed the second deposit for you.
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cirrux wrote:
Jan 12th, 2019 7:35 pm
Banks/data centers have duplicate detection systems in place that can automatically detect potential duplicates before they go out in some cases, which are generally flagged for review and rejected if they're confirmed as a duplicate.

This doesn't always work, for example when the same cheque is deposited at two different FI's. In this case, the FI the cheque is drawn on has 90 days to send a chargeback for duplicate payment to the FI that processed the cheque the second time.



There are a few specific reasons that cheques are allowed to be re-presented through clearing - one example is if the cheque is cleared in the wrong currency and charged back, the depositing FI can process it again in the correct currency - same thing applies for wrong amount. Chargeback reasons like NSF though can not be re-presented, so your scenario should result in it being charged back as a duplicate deposit (assuming it wasn't caught automatically).



The ultimate responsibility for charging back a duplicate is on the bank the cheque is drawn on. A data center like Symcor or Intria may have technology to help detect these things, but the end responsibility lies on the bank to make that return within the 90 days.
Thanks for details.
You kept mentioning 90 days. Can you tell us bit more about that and why 90 is the magic number and is it really a point of no return for good?
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snowhite445 wrote:
Jan 12th, 2019 10:03 pm
Thanks for details.
You kept mentioning 90 days. Can you tell us bit more about that and why 90 is the magic number and is it really a point of no return for good?
The CPA rules (specifically Rule A4 - subsection 6 for timeframes) set timeframes for returning items. The standard is 1 business day after the item is received at the issuer's data center, but certain return reasons that are harder to automatically detect have a longer time limit for returning - many of them are 90 days, some are up to 6 years (forged endorsements for example).

As for the "point of no return for good" part, it depends. If the chargeback was sent to the FI the cheque was drawn on outside the allowed timeframe, they're not obligated to honor it and can start the dispute process. Occasionally there will be circumstances where the two FI's can work these kinds of things out via correspondence outside of the CPA rules, but there's no guarantees on either end of that (it's more like a favour), so it wouldn't be relied on as a regular process.
[OP]
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cirrux wrote:
Jan 12th, 2019 10:27 pm
The CPA rules (specifically Rule A4 - subsection 6 for timeframes) set timeframes for returning items. The standard is 1 business day after the item is received at the issuer's data center, but certain return reasons that are harder to automatically detect have a longer time limit for returning - many of them are 90 days, some are up to 6 years (forged endorsements for example).

As for the "point of no return for good" part, it depends. If the chargeback was sent to the FI the cheque was drawn on outside the allowed timeframe, they're not obligated to honor it and can start the dispute process. Occasionally there will be circumstances where the two FI's can work these kinds of things out via correspondence outside of the CPA rules, but there's no guarantees on either end of that (it's more like a favour), so it wouldn't be relied on as a regular process.
The 6 year rule is interesting where 2 years is statue of limitation for civil claims. I am wondering if that has anything to do with the same 7 years rule that purges bankruptcy from ones credit records...

Let me pick your mind a bit more, if one cashes a cheque and then closes an account, is the bank allowed to go after them to bring the money back for the dishonored cheque or usually bank ignores pleas from the other bank if they don't have the funds available to them anymore?
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Nov 8, 2017
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What's to stop someone from doing the old empty envelope deposit?

Nothing
Newbie
Nov 14, 2014
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snowhite445 wrote:
Jan 13th, 2019 1:35 am
The 6 year rule is interesting where 2 years is statue of limitation for civil claims. I am wondering if that has anything to do with the same 7 years rule that purges bankruptcy from ones credit records...
I think a lot of the liability on these claims is passed to the customer instead of the bank (I don't work on the legal side though, so I'm just assuming here). "Forged Endorsement" and "Intended Payee Not Paid" chargebacks (the 6 year ones) are sent along with a declaration signed by the intended payee (appendix III and IV in the doc I linked earlier) stating they didn't receive the funds. These declarations have to be retained for a year - and 7 years is a pretty standard document retention period for banks/government - so you're probably not far off with your thoughts there.

snowhite445 wrote:
Jan 13th, 2019 1:35 am
Let me pick your mind a bit more, if one cashes a cheque and then closes an account, is the bank allowed to go after them to bring the money back for the dishonored cheque or usually bank ignores pleas from the other bank if they don't have the funds available to them anymore?
Whether the bank goes after the client would depend on their policies and the amount of the deposit (assuming no hold was placed on the cheque) - again I'm not on the legal side so I'm not sure what goes into those decisions.

Most return reasons fall in the 24 hour timeframe by CPA rules, so if for example, the customer was trying to get away with writing a cheque on an account that didn't have enough money in it to cover the cheque, the FI the cheque is being written on only has 1 business day from the time they receive the item to charge it back as NSF, which is why holds exist. A bank will usually hold funds for 5 business days - and if that issuing FI sends the NSF chargeback 5 days after the deposit (when the hold is expired), the depositing FI is not obligated to honor the chargeback because it was late, so the loss would fall on the issuing bank. If they had sent the chargeback within the proper 1 business day, the depositing FI's hold policy should have protected them from that loss.
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User455957 wrote:
Jan 13th, 2019 2:04 am
What's to stop someone from doing the old empty envelope deposit?
Envelopeless ABM's and holds.
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May 16, 2017
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FoFai2015 wrote:
Jan 11th, 2019 7:45 pm
... When you photo-deposit a cheque, you are supposed to destroy it, to prevent you from accidentally, or on purpose, depositing it more than once. ...
The typical mobile deposit agreement requires the depositor to retain the physical cheque for some period of days and/or mark it across the front/back as "deposited". If you destroy the physical cheque before the general hold period has expired that could create issues for the depositor. Some agreements require destruction within a specific period of time as well.
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robsaw wrote:
Jan 13th, 2019 12:52 pm
The typical mobile deposit agreement requires the depositor to retain the physical cheque for some period of days and/or mark it across the front/back as "deposited". If you destroy the physical cheque before the general hold period has expired that could create issues for the depositor. Some agreements require destruction within a specific period of time as well.
While it's true, good luck telling people what to do.
For example:
- How can you stop someone w/ a cheque to deposit multiple times? unless those start to bounce you can reclaw the money.
- How can you ensure someone would destroy the cheque? I never destroy deposited cheque, I just simply throw to a bin or ensure myself not to attempt the 2nd deposit (ethical me)
- In many way, cheque number is only for recording purpose - same way the date/time on the top right - essentially means nothing.

Note:
- In the US, mobile deposit a cheque requires these written text:
"For deposit to XXXX Bank/CU. Check the box for mobile deposit" then sign/endorse it.
- I wonder how a check would be rejected without endorsing? maybe the mobile app recognizes the text and check mark somehow?
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dekvitaly wrote:
Jan 14th, 2019 12:28 am
While it's true, good luck telling people what to do.
For example:
- How can you stop someone w/ a cheque to deposit multiple times? unless those start to bounce you can reclaw the money.
- How can you ensure someone would destroy the cheque? I never destroy deposited cheque, I just simply throw to a bin or ensure myself not to attempt the 2nd deposit (ethical me)
- In many way, cheque number is only for recording purpose - same way the date/time on the top right - essentially means nothing.

Note:
- In the US, mobile deposit a cheque requires these written text:
"For deposit to XXXX Bank/CU. Check the box for mobile deposit" then sign/endorse it.
- I wonder how a check would be rejected without endorsing? maybe the mobile app recognizes the text and check mark somehow?
Until image recognition and funds verification in the cheque clearing system are made near instantaneous there will always be those pathways somewhat vulnerable to attempted fraud. I'm less concerned about the fraud then I am about the banks pushing liability onto the defrauded customer instead of making their systems more robust.

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