Thanks to Fraud, Big Banks Might Not Let You Make Your Normal Mobile Deposit

Chris Ozarowski   Thu, November 7, 2024  GOBankingRates

Do you use mobile check deposits to put your paycheck into your bank account? If so, you may be forced to change your habits in the future. Due to a wave of mobile check scams, Fidelity Investments has begun to limit some check deposit features, The Wall Street Journal reported.

Other organizations that have been similarly affected may soon follow suit.

If you’re worried about financial scams, learn the red flags you should look out for to protect your money.

Check Fraud at Financial Institutions

Fidelity Investments is provides investment products and stock trading services to millions of customers. If you’re an American with a 401(k) or individual retirement account, there’s a good chance that you’re a Fidelity customer.

Until recently, customers with a Fidelity cash management account — similar to a checking account — could deposit paper checks by taking a photo of the check through the Fidelity mobile app. While the checks usually took two to six days to clear, customers were able to access a portion of the money right away, before the check was verified. This is what the fraudsters took advantage of.

By advertising a get-rich-quick scheme on social media, the scammers were able to convince some users to open Fidelity accounts and give them the log-in details, according to The Wall Street Journal. The scammers then took photos of fake checks and sent whatever money they could to their own accounts. They were able to convince the owners of the accounts to hand over their Fidelity credentials by telling them that they would receive a share of the ill-gotten gains.

The mechanism was similar to the “Chase Bank Money Glitch,” which went viral on social media. In both cases, users deposited fake checks through the mobile app or online portal and were able to move a portion of the funds before the checks were verified.

It’s worth noting that Chase is now filing lawsuits against customers who took advantage of this strategy.

How These Scams Work — Is Your Money at Risk?

In cases like these, the owner of the account, whose name and Social Security number were used to deposit the fake checks, is likely to be the one who suffers the consequences. The fraudsters will simply move on to another victim, or “money mule” as the Federal Bureau of Investigation calls them.

Getting access to another person’s account is a common method used for similar illegal activities, such as money laundering and wire fraud. Through social media, fraudsters find users who want to make some money and offer them a percentage of the potential gains for access to their bank account.

TO READ MORE:  https://news.yahoo.com/news/finance/news/thanks-fraud-big-banks-might-200011542.html