Check fraud is booming. Fidelity and other major banks are playing defense. Here's what you should know.

By Charles Passy and Weston Blasi

Fidelity recently reduced its mobile-deposit limit to $1,000 from $100,000 for certain customers after a number of check scams

The news that Fidelity Investments has drastically cut the amount that customers can deposit into their cash-management accounts via its mobile app has raised the question: Will other financial institutions take similar steps?

Fidelity reduced its mobile-deposit limit to $1,000 from $100,000 for certain customers after a number of check scams, according to a Wall Street Journal report. The scheme was similar to what some Chase Bank customers recently did - deposit fake or falsified checks in hopes of immediately being able to withdraw or invest those funds.

Financial institutions can sometimes take several days to verify checks prior to making funds available in customers' accounts. But in the situations involving Fidelity and Chase (JPM), some or all of the money listed on the check was available immediately, which allowed customers to use the funds before the checks were identified as fraudulent.

Chase said it has fixed the issue but did not provide details, though a person familiar with the bank said it has not lowered mobile-deposit limits. Meanwhile, Fidelity's new, lower mobile-deposit limits are only for its cash-management accounts, and do not apply to some investment accounts like 401(k)s or Roth IRAs, per the Wall Street Journal.

Still, what about the mobile-deposit limits for the rest of the country's banks? Such limits can be all over the map, starting as low as $500 per day and going as high as $30,000 per day, according to a survey from MyBankTracker. Monthly limits can also apply.

MyBankTracker Managing Editor Simon Zhen told MarketWatch that - the Fidelity example notwithstanding - he doesn't foresee banks wanting to impose lower mobile-deposit limits, noting that most have set the current amounts with the risk for fraud factored in.

But Anna Kooi, a financial-institutions practice leader at Wipfli, an advisory and accounting firm, said you can never say never. She pointed to the fact that check fraud is a growing issue, citing a recent industry report that showed a 90% increase in suspicious activity from 2021 to 2023.

And as sophisticated as banks have become in their use of technology, Kooi said it's simply easier to detect a fraudulent check by inspecting the physical copy in person, rather than relying on a photo delivered via a mobile app.

At the same time, Kooi and other industry experts said banks have embraced mobile depositing in recent years because it is more efficient and obviates the need for physical branches. Banks also know that customers appreciate the convenience of mobile depositing.

But again, the potential for fraud is something that can't be ignored.

"Banks face the challenge of balancing security with ease of use," said David Donovan, head of financial services at Publicis Sapient, a global digital consultancy.

Still, if you're a customer who wants to make large deposits via a mobile app, you have options that can enable you to do so in spite of current or future limits, experts advised.

For starters, you can always opt for a higher-tier bank account, like a "gold" account. While such accounts typically require that you maintain a larger monthly balance, they do come with benefits - and that often includes larger mobile-deposit limits.

Jeff Bucher, senior product-strategy manager at Alkami Technology (ALKT), a digital-banking solutions provider, said you can also simply ask a bank manager for a larger deposit limit. After all, they want to keep your business, particularly if you boast a high net worth, he said.

Steve Gelsi contributed to this story.

-Charles Passy -Weston Blasi

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09-28-24 0600ET

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