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Bank’s Restrictive Endorsement Policy for Mobile RDC Creates Firestorm When App Crashes

Monday, July 30, 2018 ( / Patti Murphy)

A recent glitch in Wells Fargo Bank’s mobile deposit offering illustrates how some restrictive endorsements for check deposits can be too restrictive.
The Twitter-verse was set abuzz on Friday by disgruntled Wells Fargo customers after a glitch in the bank’s mobile deposit app left many with checks they couldn’t deposit and bills they couldn’t pay.
“Went to quickly deposit a check via mobile app. App said endorse it with ‘for mobile deposit to Wells Fargo Bank only’,” tweeted a Wells customer who goes by the Twitter handle THE Harper. “I did. App won’t deposit check. Says ‘go to [bank branch]. I’m in [Oklahoma]. There aren’t any [Wells branches nearby] and now Bank of America can’t take it.”
“Wells Fargo WTF? I have signed the back of my check AS INSTRUCTED and now your mobile app tells me to go to the bank. This is no longer a MOBILE deposit.  How do I get the check deposited?” asked SVickery2012.
“Hey Wells Fargo, unable to deposit check via the app. Says take to local Wells Fargo location. That’s not convenient until next week,” tweeted Csj4008Steve. “Same problem,” tweeted BayouKitty. “Got bills coming out and nothing there for them to take. Plus kids to feed and can’t access MY MONEY! Bank shopping today,” BayouKitty added.
Wells tied to allay customer frustrations with a tweet of its own. “We apologize to our customers who may be experiencing an issue with certain types of transactions,” the bank tweeted. “Thanks for your patience while we research this issue.”
Restrictive endorsements are being adopted by financial institutions offering remote deposit capture as a way to protect against the potential that an RDC item getting deposited again as a paper check. The trend was set in motion by an amendment to Federal Reserve Regulation CC. That amendment, which took effect July 1, requires a financial institution accepting an RDC item to indemnify any FI that subsequently receives the item as a paper check deposit against losses arising because the item was already paid. The indemnity doesn’t apply, however, if the check contains a restrictive endorsement. The Fed, in detailing the amendment, used the example of a restrictive endorsement reading “for mobile deposit to” the RDC bank.
Financial institutions can, however, choose to implement and require any type of restrictive endorsement they choose. As the Wells Fargo glitch illustrates, this creates a challenging situation when the endorsed item cannot be processed as indicated in the restrictive endorsement.
“While each FI has its own risk appetite, unique client attributes, compliance requirements, etc. restrictive endorsement policies can indeed be too restrictive, as the situation at Wells on Friday demonstrates,” commented John Leekley, Founder and CEO of “Balancing risk management and customer service does not need to be a tradeoff, especially when you have the right technology in place.”
New ‘Guide to Restrictive Indorsements’ recently published a report intended to help FIs formulate and implement restrictive endorsement policies. The Guide to Restrictive Indorsements discusses considerations, perspectives, implications and other issues FIs should undertake in establishing restrictive endorsement policies, and recommends a policy which could have helped in the Wells situation. The guide is free to members; the cost to nonmembers is $149. Click here to learn more about and order your copy of the Guide to Restrictive Indorsements.


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