Fraudsters and scammers are always evolving their methods. However, models and risk management services from the Federal Reserve, along with industry collaboration, can assist financial institutions in mitigating fraud and scams.
Fighting fraud at login
Authentication matters. When customers log into their online accounts, they are thinking about the transaction they want to make, not fraud. But fraudsters and scammers have many ways of bypassing or exploiting customer accounts. Read more about how evolving authentication methods can help stop fraud in its tracks.
Classifying fraud and scams to help improve defense
Preventing authentication fraud is just one part of a financial institution’s safety net. Institutions can also voluntarily use the ScamClassifier℠ model (Off-site) and FraudClassifier℠ model (Off-site), which use a series of questions that can assist them in improving scam and fraud classification, detection and mitigation.
While they can be used separately, using the models together (Off-site) can aid organizations that want to improve their mitigation strategies and internal training by identifying types of fraud and scams, enhancing reporting, and educating customers on specific trends.
Since its launch, many institutions using the FraudClassifier model report more consistent fraud classification and tracking within their organizations. This improved understanding of fraud trends across payment types and methods enhances their ability to respond to fraud incidents.
Risk monitoring tools from Federal Reserve Financial Services (FRFS)
In addition to the FraudClassifier and ScamClassifier models, FRFS offerings can also help institutions monitor, detect and combat fraud.
The FedACH Risk® Management Services suite can assist financial institutions with ACH payment risk management, even if they use a third-party sender. The suite’s newest addition, FedDetect Anomaly Notification for FedACH® Services, supplements fraud detection and alerting tools by providing timely information about anomalies that arise in day-to-day FedACH transactions.
Check fraud continues to be a significant threat, even as check usage is declining. FRFS offers several services to aid institutions seeking to reduce check fraud, including the FedDetect® Duplicate Notification for Check Services and the FedPayments® Reporter Service for Check Services.
Industry insight advances payment safety and security
While there is no silver bullet to stop scams and fraud, the industry can foster a safer financial environment by building awareness, sharing information and promoting best practices. The Federal Reserve collaborates with a wide array of industry stakeholders, encouraging dialogue about key issues and problem-solving throughout the industry.
The Key Findings from the 2023 Federal Reserve Financial Services Survey of Risk Officers offers valuable industry perspective on the risk management landscape.
Federal Reserve-led industry work groups tackle important issues. Recently, the scams information sharing industry work group issued a report recommending the industry consider establishing an information exchange to provide scam intelligence across payment rails. The report includes ideas on how the exchange could be established and evolve.
