Fraud and Scams Advocacy
Community banks and their customers continue to be challenged by a rise in fraud and scams across payment types.
As relationship bankers, community banks know their customers in real and meaningful ways. These relationships help prevent fraud on the front lines, promote access to fraud prevention surveys, and give customers a personal resource when they fall victim to scams.
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Position & Background
- Fighting payments fraud and scams is a shared responsibility. ICBA encourages everyone in the payments ecosystem to contribute appropriately to efforts to prevent, detect, and mitigate fraud and scams. Community banks know their customers well, so they are uniquely positioned to help prevent and detect fraud on the front lines.
- ICBA encourages law enforcement agencies to respond aggressively to check fraud. ICBA opposes additional regulatory action that will add burden to community banks. Financial institutions should work together to ensure breach of warranty claims are addressed promptly as required by law.
- ICBA supports the full application of Regulation E and other consumer regulations to payment platforms that allow consumers to move money. ICBA opposes amending Regulation E to make banks liable for fraudulent transactions authorized by customers. Expanding liability under Regulation E would have a chilling and disproportionate impact on community banks.
- ICBA encourages the use of technologies, solutions, and processes that help prevent and detect fraud. ICBA also supports fraud mitigation solutions that empathize cooperation and information sharing across financial institutions.
Community banks and their customers have been increasingly challenged by a rise in fraud and scams across payment types.
Most significantly, check fraud has emerged over the last several years as a leading concern. Mail theft, increasingly sophisticated mechanisms for altering paper checks and check images, and coordination problems among banks has led to mounting losses for community banks. ICBA also supports industry-led efforts to promote effective information sharing among financial institutions to make it easier for community banks to seek reimbursement for breach of warranty claims. Finally, encouraging customers to move to electronic payments could also help to reduce check fraud.
At the same time, authorized party fraud, which occurs when an individual is fraudulently induced to make a payment, has also grown. While electronic payment mechanisms like wire, ACH, and instant payments are largely secure from a technology standpoint, it is difficult for community banks to detect and prevent these kinds of properly authorized transactions. ICBA opposes widening the scope of Regulation E to make financial institutions liable for these transactions.
Community banks continue to make significant strategic investments in fraud and scam prevention and detection. They have also worked to revisit policies and procedures to streamline mitigation efforts and comply with a complex set of regulations. As a result, community banks are increasingly resilient against fraudsters. Community banks also provide educational resources to empower customers and, when fraud occurs, effective partnership to help them recover.
Check Fraud Resources
Check fraud has emerged over the past several years as a leading concern. Mail theft, increasingly sophisticated mechanisms for altering paper checks and check images, and coordination problems among financial institutions have led to mounting losses for community banks.
Check Fraud: Engagement With Federal Bank Regulators
This guide was developed by community bankers working together as part of ICBA’s Check Fraud Task Force. This document offers suggestions on when to contact regulators, how to frame feedback, and where to direct your communication based on the experiences of peer community bankers.
Check Fraud Guide
This guide is a resource to help community banks both minimize the incidents of check fraud related to altered, forged, and counterfeit checks and take appropriate steps to recover funds or otherwise minimize loss, when it does occur.
Positive Pay Guide
Positive pay and reverse positive pay are effective tools community banks can use to help prevent, detect, and mitigate check and ACH fraud.
Check Fraud: Detection
Understand the potential technology solutions and operational mechanisms that are available to community banks to detect instances of check fraud. This is a reference for community banks to evaluate tools and leverage internal practices to identify and prevent check fraud.
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