Payments EO marks ‘significant progress’ toward fighting check fraud

The Treasury’s efforts to modernize federal payment systems, reduce fraud, and promote financial inclusion received support from America’s Credit Unions in comments filed Monday. The letter also notes how recent Executive Order 14247 on federal payments “marks significant progress” against check fraud.

“America’s Credit Unions largely supports Executive Order 14247 and the transition to electronic payments. We urge Treasury to be flexible in its implementation, recognizing for some consumers there may be legitimate obstacles to a digital banking transition,” the letter reads.

America’s Credit Unions also encourages Treasury to:

• Modernize Regulation CC to better address check fraud that takes advantage of check processing vulnerabilities and limitations on hold times, as well as take additional steps to modernize the check clearing process;
• Increase public awareness and conduct stakeholder outreach with a clear and persuasive explanation of why the shift from paper checks is happening and how it will ultimately benefit consumers; and
• Consider a range of secure electronic funds transfers (EFT) options with proven reliability for sending payments to individuals, which could include ACH direct deposit into traditional financial institution accounts, or real-time payment options via FedNow.

Recognize that EFT fraud remains prevalent and that Treasury has an institutional interest in addressing the risks posed by EFT fraud.

The letter adds that credit unions stand ready to provide financial counseling and fraud prevention resources to ensure that prospective members understand why the check phase-out is happening and what to expect in future communications from Treasury.  It encourages the Treasury to “prioritize partnerships with credit unions, community institutions, and CDFIs, which have deep community ties and often offer low-cost or no-cost accounts.”

This is part of ongoing Treasury outreach on behalf of credit unions, as America’s Credit Unions recently attended a Treasury roundtable on the executive order, met with Treasury Deputy Secretary Michael Faulkender, and called for updated funds availability rules to help credit unions combat check fraud in a separate letter to the Treasury. 

Read the full letter here.