Pub. 9 2014-2015 Issue 2

July | August 2014 13 Extraordinary Service for Extraordinary Members. For more information, contact Alison Gutierrez at Kutak Rock LLP at (402) 346-6000 or alison.gutierrez@kutakrock. com. Gutierrez is a partner in Kutak Rock LLP’s financial services litigation practice group. cern the proposed indemnity would be counterproductive to the growing movement toward electronic transactions and may discourage financial institutions from offering RDC services altogether or cause them to charge RDC customers for the service in order to compensate for the increased risk they would face in providing RDC to their customers. 6 Other commenters, including a group comprised of the American Bankers Association, the Clearing House Payments Co., LLC, and the Independent Community Bankers of America, among others, offered support for the proposed indemnity, noting the indemnity “address[es] a scenario where it is reasonable to impose the loss on the truncating bank which was best positioned to control the subsequent deposit of the paper check by its customer.” The group recommended one change to the final rule to clarify that the depositary bank accepting the original check can make the indemnity claim without first seeking to charge the item to the bank’s deposit- ing customer’s account, so as to avoid delays in resolving the duplicative claim. 7 As some of the commenters noted, one practice some financial institutions implement to mitigate the risk of mul- tiple deposits is to require depositors to place a restrictive endorsement on the back of a check deposited using RDC stating the item is “for mobile deposit only,” and identifying the date of deposit, the financial institution name, and the ac- count number into which the check is to be deposited. 8 Other practices financial institutions commonly use tomitigate risks include prequalification of customers to use RDC based on length of time as a customer, average account balance, and incident of overdraft activity, and imposing limitations on the dollar amount of checks deposited throughmobile RDC. 9 As the volume of RDC deposits increases, particularly with the growing popularity of mobile RDC, the potential for liability resulting from multiple presentments will continue to increase. If the Federal Reserve Board adopts the proposed indemnity, financial institutions offering RDC will face a new potential claim by secondary depositary banks of which they need to be aware. In light of this potential new claim, financial institutions should re-evaluate their current risk- management strategies and determine whether additional strategies should be implemented in order to mitigate this new potential risk.  1 Fox Sports, Four UGA Football Players Nabbed for Illegal Cash-Checking Scheme, March 18, 2014, http://msn.foxsports.com/south/story/four-uga- football-players-nabbed-for-illegal-cash-checking-scheme-031814 (last visited June 26, 2014). 2 RDC first became available in 2003 with the passage of the Check 21 Act, Pub. L. No. 108-100, 117 Stat. 1177, codified at 12 U.S.C. §§ 5001-5018, whichmade substitute, scanned versions of checks the legal equivalent of original checks. 3 Mitek, New Research Shows 90 Percent of Financial Institutions Report Mobile Deposit Benefits OutweighRisks and Costs, May 21, 2014, http://www. miteksystems.com/about/news-releases/company-updates/new-research- shows-90-percent-of-financial-institutions-report (last visited June 26, 2014). 4 Availability of Funds and Collection of Checks, 79 Fed. Reg. 23 (proposed Feb. 4, 2014) (to be codified at 12 C.F.R. § 229). 5 Id. (to be codified at 12 C.F.R. § 229.34(g)). 6 See, e.g., Letter from Dennis Tsang, Credit Union National Associa- tion, Assistant General Counsel, to Robert deV. Frierson, Secretary of the Board of Governors of the Federal Reserve System (May 2, 2014), avail- able at http://www.federalreserve.gov/SECRS/2014/May/20140515/R- 1409/R-1409_043014_129433_566843786810_1.pdf. 7 See Letter fromNessa Feddis, Senior Vice President and Deputy Chief Coun- sel, American Bankers Association, et al., to Robert deV. Frierson, Secretary of the Board of Governors of the Federal Reserve System (May 2, 2014), available at http://www.federalreserve.gov/SECRS/2014/May/20140516/R- 1409/R-1409_050214_129447_523562032230_1.pdf. 8 Letter from Robert Staatz, President/CEO, SECU, to Robert deV. Frierson, Board of Governors of the Federal Reserve System, (May 1, 2014), avail- able at http://www.federalreserve.gov/SECRS/2014/May/20140513/R- 1409/R-1409_050214_129417_367612283804_1.pdf. 9 Best Practices for Mobile Remote Deposit Capture, James Debello, BAI, Jan. 23, 2013, http://www.bai.org/bankingstrategies/Distribution-Channels/ Mobile/Best-Practices-for-Mobile-Remote-Deposit-Capture (last visited June 27, 2014).