Dive Brief:
- The Federal Reserve, the Federal Communications Commission and the U.S. Treasury Department are forming a public-private roundtable to solicit feedback on how to combat payments fraud, Michelle Bowman, the Fed’s Vice Chair for Supervision, said in a speech on Tuesday.
- The roundtable will discuss financial firms’ fraud-prevention efforts, the effectiveness of their data-sharing practices and possible cross-sector or government solutions, Bowman said, speaking at a housing finance conference in Washington.
- The Federal Reserve Board has reviewed more than 250 comments received last June in response to a request for information from the Fed, the FDIC and the Office of the Comptroller of the Currency. The Fed will use those comments to shape its approach to mitigating payments fraud, Bowman said.
Dive Insight:
In her speech, Bowman expressed support for strong partnerships between states and federal agencies to address the ever-evolving threat of payment fraud. The Fed plans to enlist banks, other regulatory agencies, law enforcement, consumer advocates and policymakers in its fight, she said.
“We must examine whether our regulations address modern fraud and are positioned for the threats consumers will face in the future,” Bowman said. “And we must ensure the financial system serves everyone safely and securely. The criminals are sophisticated, organized, and relentless. Our approach must be equally robust.”
One key step Bowman identified during her speech is the lack of a common vocabulary to describe payment fraud forms.
While some classification models label scams, for example, “online shopping fraud,” others are called “imposter scams.” Having shared terminology for types, scams and prevention tools could help gauge the severity of the problem, Bowman explained during her remarks.
The FDIC, the Fed and the OCC have previously collaborated to handle payment fraud. Last year, the agencies proposed a series of steps to mitigate payment fraud, particularly check fraud. At that time, Bowman also said she would collaborate with state and federal regulators and law enforcement.
The Fed isn’t the only one raising the alarm on rising payments.
The U.S. could learn from other countries as to how to curtail fraudulent payments, Donna Turner, a consultant with Risk Insight Solutions and a former COO of Early Warning Solutions, the bank-owned parent of Zelle and Paze, said during a March panel hosted by Payments Dive and Banking Dive.
Coordination between banks, social media and telecommunications companies could also help identify threat actors as they use AI tools, Paul Benda, executive vice president of risk, fraud and cybersecurity for the American Bankers Association, said during the panel.
