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Wyatt Bell's Blog

Beware Smart Phone Check Deposit Apps
by Wyatt Bell | 2011/08/19 |

A incident reported by The Florida Land Title Association demonstrates how clever some can be in using technology to ensnare the title agent in a fraud. Smart phones are wonderful but beware!!

Wyatt Bell's Blog ::

The settlement went off without a hitch. The checks were issued and the parties left.

Several hours later the couple who had been issued a check for the settlement proceeds returned with the check and asked the title agent to instead wire the funds as the bank would take 24-48 hours to clear the check.

Unbeknownst to the title agent the couple had used a "smart phone" app to take a picture of the front and back of the check to make an immediate deposit. When the couple gave the check back to the title agent there were no marks or other indicators that the check had entered the system. The title agent, wanting to accommodate its customer, put the check in the file and proceeded to make the wire transfer!

It would seem prudent practice that once a check has been placed in a party's hand, and certainly if its left the settlement room, there can be no exchange until a satisfactory period has passed. The settlement officer conducting the closing should make it known that once the check is given there is no alternative allowing the parties the chance to alter the payment method prior to any check being released.

Many of the larger institutions are pushing the idea of the Smart Phone App which allows a snap-shot of the instrument to be presented for payment or deposit electronically. As marvelous and efficient as this Smart Phone process may be the settlement agent needs to guard against chicanery!!

 

 




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387 words | 3479 views | 4 comments | log in or register to post a comment


That is scary!

It does appear however, that this particular agent did the right thing.  She voided the check, so it won't clear from the "smart-phone deposit" and the money won't be paid twice.  It still takes time for a check to clear, even with the appearing "instant" deposit from a smart-phone app. 

But, I could see how an agent could get burned by thinking, "I have the original check, I can just write 'void' on it and stick it in the file."  I guess that isn't true anymore.  Once that check leaves your sight, you better call the bank and have them void it before you reissue any payments. 

Interesting find, Wyatt.  Thanks for sharing.

Here is a link to the FLTA forum post on the topic.

 
by Robert Franco | 2011/08/19 | log in or register to post a reply

Good Outcome Fortunately!

Robert,

Thanks for updating the facts.

I had gotten a phone call early this morning regarding the phone-app scenario and I wanted to broadcast the issue pronto!

It's important to keep in mind that some banks take 24 hours for stop-payments to be effective. Positive Pay could be another issue as the check would be "authorized" and without a rebroadcast of the Positive Pay file the check would be honored against the list.

I think it extremely important that title agents be extra vigilant anytime a request is made to change a payment method!

 

 

 
by Wyatt Bell | 2011/08/19 | log in or register to post a reply

Very Scary!
Thanks for posting that. Most of the smaller title agents may not think about the smart phone app that allows the check to be deposited electronically and may end up in a legal mess because of it. 
by Penny Bettorf | 2011/08/19 | log in or register to post a reply

Thank you Wyatt

Now that you have scared the crap out of me!!  I honestly never would have given this scenerio a thought.  I will for sure be on the lookout for this newest scheme. 

Many thanks to you for posting this information

 
by CHARLENE PERRY | 2011/08/24 | log in or register to post a reply
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