I recently became aware of a nasty problem within the banking system.
It’s a hole that has been around for at least a year, and as far as I can determine, has never been properly addressed. I only know about it because it recently happened to me, but it could happen to anyone who writes cheques.
It involves the relatively new option of Remote Deposit Capture which allows people to deposit a cheque using a smart phone app.
I had always assumed my bank would never implement such a system without doing due diligence. After all, I trust my bank with all my money. Surely they would do everything humanly possible to prevent someone from making an illegal withdrawal from my account. Unfortunately, I could not have been more wrong.
I issued a cheque in January, which was apparently cashed using this new technology. I had no way of knowing this, of course, because how the cheque was actually cashed was not indicated on my bank statement. A few months later, however, when I received my bank statement in April, that very same cheque had been cashed for a second time, this time using the actual physical cheque.
When I called the bank about it, they verified it was indeed a mistake. I was assured that this incident was just a minor glitch in the system and would be corrected within 24 hours. Two weeks later when it was still not corrected I called the bank again. This time I was informed they had a huge backlog of corrections to make and that I would have to wait a few more days to get my money back.
The term I found on the internet for this type of fraud is ‘double presentment.’ If you suddenly find that your rent cheque has bounced because your chequing account was overdrawn, you could be the victim of this new technology.
What makes it worse is that your bank may be completely unaware anything has happened, and is not likely to do something about it unless you contact them. The only solution I can offer at this point is to be vigilant and keep a close eye on your accounts; at least until the banks can sort this problem out.
David Korinetz
Penticton