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Thieves finding ways to use mobile banking to cash checks twice

By Elaine Silvestrini
Published: February 20, 2015 Updated: February 21, 2015 at 09:12 AM

TAMPA — Mobile banking, a convenience for bank customers, is being exploited by thieves.

Just this month, nine people have been named in two federal indictments handed up in Tampa alleging they used mobile applications allowing them to make bank deposits by taking pictures of money orders and submitting them. The defendants are accused of then cashing the money orders at post offices and withdrawing the deposited funds.

In other words, authorities say, the suspects took advantage of mobile banking to cash the same checks twice.

This type of mobile deposit fraud happens sporadically around the country, said Doug Johnson, senior vice president, payments and cybersecurity policy at the American Bankers Association. “We don’t see it as a tremendous trend, but it does occur,” Johnson said.

Sometimes it’s inadvertent, Johnson said. A customer will forget depositing a check, will find it later and try to deposit or cash it again. Banks can usually easily determine when that occurs, he said.

Johnson said he hears of cases “every couple of months or so” like the people charged in Tampa. “But that’s probably overstating the case.”

Johnson said he doesn’t know how many banks offer mobile banking to their customers, but those that don’t are “increasingly becoming the exception... Customers tend to find it as a very convenient method to deposit their checks.”

According to the Tampa indictments, the suspects opened bank accounts in business names, such as Five Star Upholstry, Marci’s Movers and 7th Avenue Entertainment. They then purchased money orders at various post offices. They next deposited the money orders remotely, cashed the money orders at post offices and withdrew the funds from the bank accounts.

One indictment handed up on Feb. 4 lists more than 30 such transactions totaling more than $500,000. Charged in that case are:

Brian Lewis, 28, Wesley Chapel; and Demario Perez, 29, Jason Devine, 33, Joe Luis Diaz, II 25, Ronald J. Anderson, III, 26, all of Tampa.

The second indictment handed up Wednesday lists 15 transactions worth more than $150,000. Charged in that case are: Erica Gray, 31, Tampa; and Kendrick Bachus, 29, Michael Thomas, 28, and Michael Finnie, 27, all of Memphis, Tenn.

Most of the defense lawyers either could not be reached or had no comment. Mark O’Brien, who represents Lewis, said, “We will vigorously defend Mr. Lewis in federal court using all of the legal tools we have at our disposal.”

The Consumer Financial Protection Bureau has compiled tips for consumers using mobile banking services, such as setting up balance alerts and frequently checking their account balances and using secure websites and apps.

Banks are exploring ways to prevent the fraud, and some require customers to put something on the back of the checks such as “for remote deposit only” that would prevent the check from being subsequently cashed.

The problem with that solution is the remote deposit systems can’t tell from photographs that the back is from the same check as the front photographed. Banks are developing systems to address that, too, Johnson said.

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Twitter: @ElaineTBO