Mobile Bank Deposits

Advances in technology continue to affect the way we conduct banking transactions. For instance, we now have the ability to deposit a check through the use of our cell phones.  In a nutshell, a consumer uses the mobile banking application on his or her smart phone to take a picture of the front and back of the check and then, following a few simple prompts, deposits it into his or her bank account.  ConsumerReports.org recently reported on this phenomenon, highlighting some of the things consumers should keep in mind.

According to the article, which cites a recent Federal Reserve survey, over 75 million U.S. consumers use their smart phones for mobile banking. Of those consumers, only 38% have tried mobile depositing in the past year. One of the advantages that the article highlights is the fact that mobile depositing saves consumers time and hassle, since they do not have to travel to the bank or wait in line. However, not all banks offer the service.

The article points to a few potential disadvantages to mobile depositing, such as:

1. delayed funds availability, depending on bank policy or account agreement;
2. remote-deposit fees (this is uncommon); and
3. returned-deposit fees, if a check is inadvertently deposited twice.

The federal Expedited Funds Availability Act (12 USC § 4001, et. seq.) and its implementing regulation (12 CFR § 229) address the issue of whether financial institutions are allowed to place a hold on the availability of funds when a consumer deposits a check.  Under the act, the general rule is that a depository institution must make funds deposited in an account by check available for withdrawal by the following business day.  The article points out that these regulations were written before the advent of mobile banking and this presents potential loopholes.