No, the current language in Regulation CC does not encompass mobile check deposits. Mobile deposits occur when a customer takes a picture of a check and transmits the image electronically to their bank. This process is referred to as remote deposit capture (RDC). We spoke with an attorney at the Federal Reserve Board who confirmed that RDC transactions are outside the scope of Regulation CC. The attorney stated that “checks” within the meaning of the Expedited Funds Availability Act and Regulation CC must be in tangible form. This is based on Uniform Commercial Code definitions, which require checks to be written instruments. When a “check” is deposited through RDC, the bank never receives the check in tangible, written form. Consequently, RDC transactions — including checks deposited through mobile devices — are not governed by Regulation CC.

Despite the “gap” in Regulation CC’s application to mobile deposits, the FDIC has emphasized that “most legal risks associated with offering RDC services can be mitigated through the use of appropriate contracts and customer agreements.” Therefore, your bank should maintain customer agreements that clearly explain the rights and responsibilities of all parties regarding mobile deposits.

For resources related to our guidance, please see:

• Regulation CC, 12 CFR 229.19 (Describes when funds are considered “deposited” but does not address RDC)

• Regulation CC, 12 CFR 229.2 (Defines “check”)

• FDIC Supervisory Insights, Remote Deposit Capture: A Primer (2009) (Describes RDC as the process where “paper checks are digitally scanned, and an image of the check is electronically transmitted to the customer’s bank.”)

• FDIC Supervisory Insights, Remote Deposit Capture: A Primer (2009) (“Most legal risks associated with offering RDC services can be mitigated through the use of appropriate contracts and customer agreements. The RDC service agreement should describe the responsibilities and liabilities of the financial institution and its customer, including record retention periods for the original deposited items, physical and logical security measures protecting the RDC scanner, and proper disposal of the original deposited items once the retention period has expired. The agreement also should describe the types of items that can be deposited remotely, individual item dollar limits, overall per-day dollar limits, and minimum image quality standards.”) 

• FDIC Supervisory Insights (Winter 2011) Mobile Banking: Rewards and Risks (“Financial institutions that enable consumers to access deposit and loan services through their mobile device should ensure that any applicable disclosure requirements, including format, content, timing, and manner of delivery, are fully accessible to the customer.”)