Banks are only one contributor to the overall safety and security of the payments ecosystem and cannot single-handedly prevent criminals from defrauding consumers or financial institutions, the American Bankers Association and three bankers associations said in a joint statement to lawmakers. The groups instead argued that addressing the problem requires a multiprong approach, which includes enhancing collaboration with law enforcement and regulators, increasing consumer education, and developing a national strategy for scam and fraud prevention and response.
The statement was in response to a House Permanent Subcommittee on Investigations hearing on Tuesday on Zelle and fraud. In their statement, the associations referenced their May 21 statement to the subcommittee in which they noted banks’ long history of improving and innovating to protect their customers. Still, when customers are deceived into transferring their money to criminals, or when mail containing checks or sensitive consumer information is stolen from a post office, there are limits to what banks can do, they said.
“The activities of these criminals touch more than just the banking industry, and the efforts to counter frauds and scams must similarly be cross-industry,” the associations said. “Each step in the scam ecosystem—from how a scammer identifies consumer targets, to how a scammer communicates instructions to a victim, to how the money is processed—offers an opportunity to stop the flow of funds to the criminal. Focusing on only one aspect or one step in the process will not stop this surge of scams. Rather, a holistic approach to address all the entities and elements of a scam has the best chance of being successful.”
That holistic approach includes not just enhanced government collaboration and increased consumer education, but also involving other sectors in protecting consumers from scams, preventing risky data scraping practices and facilitating improved information sharing.
“Banks are taking significant steps to mitigate fraud and other criminal activity by investing in new technologies, deploying public relations campaigns to educate consumers and small businesses about common scams, and partnering with law enforcement and other federal agencies on new initiatives to combat fraud,” the associations said. “Yet our industry recognizes that there is more work to do, and banks cannot stop criminals by themselves. Every participant in the scam ecosystem must play a role, from telecommunications firms to social media companies to law enforcement. And we would welcome greater collaboration with engaged community groups who have the trust of consumers across the country.”
