Fraud fight: Prioritize innovative technology, information-sharing

America’s Credit Unions is calling on the Federal Reserve, Comptroller of the Currency, and FDIC to take a technology-forward, collaborative approach to tackling payments fraud in response to an interagency request for information (RFI) on fraud prevention. 

Industry reports indicate fraud losses totaled $132 billion in 2023. America’s Credit Unions Director of Innovation and Technology Andrew Morris said an effective strategy to mitigate fraud and improve early warning capabilities should also emphasize the use of regulatory modernization and consumer education. 

“The Agencies should recognize that financial institutions are often limited in their ability to target the root causes of fraud. Criminals can easily adopt new tactics which prey on weaknesses in human judgment or the vulnerabilities present in less regulated parts of the economy, such as online marketplaces,” Morris wrote. 

Morris also stated voluntary information-sharing among financial institutions, regulators, and law enforcement could be enhanced by promoting the use of consistent taxonomies to describe the various forms of payments fraud. 

Additionally, Morris urged the agencies to consider federal partnerships with agencies such as the Federal Communications Commission and Federal Trade Commission to raise awareness of scams and criminal tactics that propagate on platforms that credit unions and financial institutions do not control. 

Fraud continues to be a top concern for credit unions, and America’s Credit Unions continues to raise awareness and make positive changes on both the legislative and regulatory fronts. The organization previously shared how fraud solutions should empower credit unions to enhance their role as consumer protectors.  

On the legislative front, following a House Financial Services subcommittee hearing on fraud, Committee Chairman French Hill, R-Ark., Oversight and Investigations Subcommittee Chair Dan Meuser, R-N.Y., and Financial Institutions Subcommittee Chair Andy Barr, R-Ky., wrote to the Federal Reserve regarding its efforts to combat payments fraud. The lawmakers cited their intent to conduct oversight of the Fed’s use of existing authorities to “improve the security of payment and settlement systems and promote consumer protection.”  

The lawmakers requested the Fed provide a list of its outreach efforts on various types of fraud, its plan to address additional types of payments fraud, a briefing on how the Fed’s structure may impact its ability to counter fraud, as well as a briefing on comments received in response to the interagency RFI. They also instruct the Fed to describe how it has collaborated with other agencies and industry stakeholders. The Fed must appear before the committee no later than Oct. 1 with the requested reports. 

Read the full letter