What is a Mobile Deposit Scam?

Person taking a photo of a check for a mobile banking deposit.

Mobile deposit scams have become increasingly prevalent in today's digital banking age. These scams exploit the convenience of mobile banking apps to deceive individuals and defraud millions of dollars each year.  

In this article, we will cover how mobile deposit scams work, explain common types of mobile deposit scams, and explain how you can protect youself and others from falling victim. 

How Mobile Deposit Scams Work 

Mobile deposit scams typically involve criminals manipulating unsuspecting victims into depositing fraudulent checks through mobile banking apps, or into releasing their login information for the scammers to do so. They exploit the time it takes for banks to verify the legitimacy of checks, enabling scammers to receive the funds before the banks uncover the fraud.

Much like phishing scams, mobile deposit scams rely on psychological manipulation to convince victims to deposit checks on behalf of scammers or participate in seemingly legitimate financial transactions. 

3 Common Mobile Deposit Scams 

Knowing how mobile deposit scams work and what to look for can help you and your loved ones stay safe from scammers. To get a sense of how mobile deposit scams are executed, here are three common examples: 

  1. Fake Check Scheme. The scammer sends a fake check to the victim, usually in an overpayment scenario, such as for an item sold online. The victim is instructed to deposit the check and send back the excess funds. By the time the check bounces, the scammer has vanished with the victim's money. 
  2. Employment Scam. Scammers pose as potential employers, promising remote jobs where the victim will be responsible for depositing company checks into their personal accounts and forwarding a portion of the funds elsewhere. This facilitates money laundering and leaves the victim liable. 
  3. Loan Scam. The scammer, usually via a fraudulent website that advertises loans, obtains your login information in order to “direct deposit” a check into your account. You are then directed to return funds to the “loan company” to qualify for a higher “loan amount”.

How to Prevent Yourself from Falling Victim to a Mobile Deposit Scam

There are steps you can take to protect yourself from this type of scam. The bottom line is that if something seems off about a potential transaction, trust your instincts. Here’s what you can do to be proactive against mobile deposit scams: 

  • Verify the source. Before accepting checks or offers, research the person or organization involved. Look for contact information, address, and an online presence. Legitimate companies will have an established digital footprint. 
  • Be cautious with checks. Don't blindly trust checks received from strangers. Verify the legitimacy of checks by directly contacting the issuing bank. Never deposit a check if you suspect it might not be legitimate. 
  • Secure your WiFi and devices. Use secure password-protected WiFi networks for mobile banking. Ensure that your mobile devices are protected with up-to-date security software and refrain from using public WiFi networks for banking transactions. 
  • Protect your personal information. Avoid sharing sensitive personal and financial information with unknown or unverified individuals or companies. Scammers often use this information to create more convincing schemes. 
  • Educate yourself.  Stay informed about different mobile deposit scams and how they are evolving. Look out for red flags such as unsolicited offers, requests for personal financial information, or deals that sound too good to be true.  

Final Thoughts 

Mobile deposit scams are a growing threat as digital banking becomes more popular. Understanding how these scams work is crucial to staying ahead of bad actors who are trying to steal sensitive data or swindle you out of money.  

By educating yourself about their tactics and taking preventive measures, you can safeguard yourself and your loved ones. Staying vigilant is essential. When in doubt, always consult your credit union or financial institution for guidance. Together, we can prevent mobile deposit scams from wreaking havoc.