How ICBA is Fighting Fraud Through Advocacy

Bank fraud isn’t going away. It keeps changing and getting harder to manage as AI-driven scams, check fraud, account takeovers and other financial crimes hit banks from multiple angles. 

Last year, 60% of financial institutions and fintechs surveyed by Alloy saw an increase in fraud compared with 2024, with organized crime rings responsible for 71% of those incidents.

Community banks deal with this every day. Testifying before the House Financial Services Committee’s Subcommittee on Financial Institutions, Gay G. Dempsey, CEO of Bank of Lincoln County in Fayetteville, Tennessee, described fraud as a constant issue that keeps shifting and getting harder to manage.

In her testimony, Dempsey talked about the many types of fraud banks are dealing with right now, from romance and impostor scams that start on social media to checks stolen and altered before they ever hit an account. The damage doesn’t stop with the individual customer either, she said. It reaches small businesses and local communities and has real consequences for the people community banks serve.

“Escalating fraud losses are a priority concern for community banks,” Dempsey said. “I have dedicated considerable time and effort to fighting payments fraud and scams, having witnessed first-hand the impact on my customers, my bank and peer community banks, local small businesses and our community. Fraud creates financial ruin for too many individuals and endangers local prosperity.”

What Legislative Changes Are Needed to Stop Bank Fraud?

ICBA is calling for changes that would give community banks more time and flexibility to stop fraud before losses build, including:

• Longer hold times and clearer guidance under Regulation CC so banks have time to catch suspicious deposits
• A dispute process that helps banks quickly pursue check fraud claims
• Keeping Federal Reserve check services that help identify and stop fraud
• Supporting the STOP Fraud Act and the Bank Fraud Technology Advancement Act, both of which would give banks better tools to deal with evolving fraud threats

Through our Fraud and Scams Task Force, ICBA has developed guidance on check fraud liability, detection methods and how to escalate disputes when another bank is involved. That guidance is built around real cases and day-to-day issues and backed by training that helps staff recognize and address the threats. The task force brings together people across roles, from CEOs to operations teams to fraud investigators, to meet regularly, compare notes, share what they’re seeing and work through possible responses. 

Regulators have also joined those discussions, giving community banks a direct way to share feedback and push for changes based on what’s happening in the field.

Cross-Sector Collaboration Is Essential for Fraud Prevention

ICBA also supports the SCAM Act (H.R. 7548), which would require online platforms to take more responsibility for fraudulent and deceptive ads and strengthen enforcement of consumer protection laws. Many of the scams Dempsey described in her testimony begin there, forcing banks to limit the damage after the fact.

We’ve also been raising awareness of the unique challenges community banks face on both the regulatory and legislative fronts. They operate close to their customers and know firsthand how these scams play out in real time. Our members also operate with fewer resources and tighter constraints than larger institutions. That combination shapes how they respond and what they can realistically do to stop fraud before losses occur. Having a community banker speak about those experiences in a public hearing helps policymakers understand those realities.

ICBA also understands that banks don’t operate in a vacuum. They might wind up absorbing the fallout from scams that started somewhere else, like on a social media platform or through a spoofed phone call. Dempsey laid both out in her testimony and in the questions she fielded at the hearing. She made the case that getting a handle on fraud requires buy-in from stakeholders well outside the banking world. 

Bottom line? No single sector can solve this alone, and the answer can’t stop at the bank door.

Fraud Prevention Resources Available for Community Banks

ICBA has resources in place that members can start using right now to manage the evolving fraud environment. The Fraud and Scams Task Force is open to new members, for example, and includes people across roles, from CEOs to fraud investigators. The group meets regularly to share what members are seeing and work through responses together.  

The fraud channel on ICBA Community is another option that members get involved with. More than 1,000 members use it to share intelligence, cases and strategies. You can participate as actively or passively as you’d like, but either way, you’ll have access to what your peers are dealing with and how they’re responding.

On the legislative front, if you have meetings scheduled with members of Congress, ask them to cosponsor the SCAM Act. It’s an important ask that reflects what community banks are seeing firsthand and dealing with daily.

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