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ACH, Wire and Check, Oh My!

Supervision News Flash
August 2020
person at a computer in the shadows

As our world continues to change and adapt to the COVID-19 pandemic, fraudsters are taking advantage by unlawfully profiting off programs intended to benefit individuals, small businesses and local economies. While these bad actors shift their targets quickly, their methodologies remain mostly unchanged. Financial institutions, law enforcement and regulators are also adjusting their approaches to uncover and stop these schemes. However, the terminology used to describe the payment portion of these frauds differs across organizations. Ensuring that the payment industry adopts similar language to classify fraud types can facilitate better information sharing, enable consistent tracking and enhance customer education.

In late June, the Federal Reserve introduced the FraudClassifierSM Model. The model was developed by the Fraud Definitions Work Group, whose objective is to develop a more consistent and holistic view of terminology used by the industry to describe payments fraud. The Work Group is comprised of payments industry fraud experts from financial institutions, service providers, FinTech firms and the Federal Reserve.

Your organization can voluntarily join the FedPayments Improvement Community by submitting or updating your FedPayments Improvement Community profile and selecting “ACH, Wire and Check Fraud Definitions” as a topic of interest. It’s free and there is no supervisory requirement to participate or implement the standards described within this article.