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Are deposits made through a customer's mobile phone subject to Regulation CC’s funds availability schedules?

Are deposits made through a customer's mobile phone (remote deposit capture) subject to Regulation CC’s (Expedited Funds Availability Act) funds availability schedules?

No. Checks deposited through a mobile device such as a phone (remote deposit capture) are not subject to the funds availability requirements of Regulation CC. Recently, a post on a prominent government website erroneously suggested they are subject to the Regulation CC funds availability schedule, causing some confusion.

Regulation CC imposes funds availability requirements on checks, electronic payments, and cash. Checks deposited through a mobile device are not any of these.

A check deposited through a mobile device is not a check under Regulation CC. Regulation CC's §1029.2(k)(1) defines a "check" as "a negotiable demand draft drawn on or payable through or at an office of a bank." A picture of a check that a customer transmits to the bank using the customer's mobile device is not "negotiable" and therefore not a check under Regulation CC’s definition of the term.

Nor is such an item an "electronic payment" under Regulation CC, which it defines as "a wire transfer or an automated clearing house (ACH) credit transfer." Pictures of checks are not either of these. Clearly, these items are not cash.

Thus, the funds availability schedules do not apply to checks deposited through a mobile device. Of course, many banks nevertheless apply their standard funds availability policy to such deposits. While mobile deposits may present greater risk of loss, those risks may be managed with other controls such as dollar amount and frequency limitations.

Moreover, banks should disclose their funds availability policy with regard to checks deposited through a mobile device. Regulation CC's §229.16(a) requires banks to disclose their policy as to when "funds" are deposited. The commentary to §1029.16(a)(2) explains that the disclosure must reflect the bank's policy regarding availability for most "deposits." Neither "funds" nor "deposits" is defined. However, it is plausible that they include checks deposited through a mobile device. Second, regardless of Regulation CC, the funds availability schedules should be disclosed because customers might presume that such items would be subject to the normal check availability schedule, unless they are specifically advised otherwise, and then rely on that expectation. For these reasons, it is appropriate to include such items in the funds availability schedule. In addition, many banks explain the funds availability of these items in their separate mobile banking agreement where customers might be more likely to notice the policy. (March 2016)

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