New warranty and indemnity rights, liabilities and obligations to Regulation CC could impose greater risks for credit unions. The final rule creates a new Remote Deposit Capture Indemnity in Section 229.34(f) to address the allocation of liability when a depositary institution, such as a credit union accepts deposit of a check through “remote deposit capture.”

In other words, when the depositor/member sends the credit union electronic information about a check, such as a photographic image, which the credit union uses to create an electronic check or substitute check for collection. The indemnity would be provided by a credit union that accepted a check by remote deposit capture to a financial institution that accepted the original check for deposit, in the event the financial institution that accepted the original check incurred a loss because the check had already been paid. The final rule also added an exception to the indemnity which would prevent a bank from making an indemnity claim if it accepted the original check containing a restrictive endorsement inconsistent with the means of deposit, such as “for mobile deposit only.”

Some check vendors are now printing checks with a checkbox on the back which states, ”check here if Mobile Deposit,” but there has been some question as to whether simply checking that box fulfills the restrictive endorsement requirements.

If your credit union accepts checks by remote deposit capture, you may want to review the language in your Mobile check deposit agreement or Remote Deposit Capture Agreement (if the language isn’t already there) that requires the credit union’s member to add a specific restrictive endorsement to the check such as “For Mobile Deposit Only, at ABC FCU into account #123456789” and also require the new check box which identifies the check as “For Mobile Deposit” to be checked.

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