With the dramatic growth in consumers depositing checks via smartphone (11% of consumers in 2013 used this feature), it is important for consumers to know some of the drawbacks.  NY Times to the rescue:  

Some banks, for instance, don’t offer immediate availability of funds deposited by smartphone, as a way to control fraud. Banks also impose limits on the amounts that can be deposited using mobile phones, also to protect against fraud. But it can be difficult to find that information; some banks put such information online, rather than within the app that customers use to deposit the checks, Pew found.

While it’s so far been relatively limited, fraud can occur with mobile check deposit, partly because unlike with traditional check deposits, the customer retains the original paper check, which can be redeposited — either by accident or intentionally.

Here’s a good tip on how to sign a check that you depositing via phone (and to avoid potential for fraud!):

In general, adding the phrase “for mobile deposit only” is a good idea, said James DeBello, chief of Mitek, which provides the systems that process mobile check deposits at many banks. That helps reduce the chance that someone could — intentionally or by accident — try to cash or redeposit the check. Mitek now offers banks the ability to scan checks for the presence of such “restrictive endorsements,” to reduce the risk of multiple deposits, Mr. DeBello said.

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Check out our lesson on Mobile and Online Banking

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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