By Rob Nichols
ABA Viewpoint
As members of the American Bankers Association gathered in New York this past week for our Annual Convention, it might surprise you to learn what issue kept dominating the discussion among bank leaders from across the country.
While they’re certainly interested in the election, the economy and conflict in the Middle East and Europe, the topic really bringing bankers together right now is the fight against fraud.
Today, sophisticated international criminal gangs are using advanced technology to prey on Americans with increasing frequency, often posing as your trusted bank to try to steal your hard-earned money. The Federal Trade Commission reports that fraud losses in the U.S. topped $23.7 billion last year, though some estimate that number could be as high as $158 billion.
New survey data from ABA and Morning Consult shows that consumers credit the banking industry with doing more than other industries to protect them from fraud and keep their information safe, with almost nine in 10 Americans crediting their bank with taking proactive steps to protect them from fraud and scams.
But we can’t win this fight on our own. We need the federal government and other stakeholders to step up as well.
Specifically, it is time for the next administration to establish a White House office to develop and coordinate a National Scam and Fraud Prevention Strategy. These crimes cost consumers billions of dollars each year and current federal efforts need better coordination. A national strategy is vital to develop and implement a coordinated federal approach focused on stopping consumers from being scammed in the first place and developing solutions to assist consumers once the scam has been perpetrated.
The strategy should ensure that others with a key role in the fraud ecosystem such as telecoms, social media and law enforcement are brought to the table, and it should include strengthening capabilities that reduce the ability of criminals to be “technologically authenticated” through impersonated social media accounts or spoofed or fake caller ID messages. These efforts need to be coordinated among multiple agencies, so that when these schemes are discovered, law enforcement can take appropriate action.
We also need to see better coordination among the federal agencies involved in tracking financial crime. Today, consumers are asked to report fraud to the FBI, FTC and CFPB, as well as local law enforcement, which can create confusion among consumers. A single streamlined and centralized government reporting process would lead to improved information sharing between the government and the private sector, enabling them to better identify trends and the source of scams, so that the numbers and websites being used to perpetuate these scams can be blocked. Improved coordination should be accompanied by a renewed commitment by law enforcement to prosecute the bad actors.
During this week’s Convention, I had the chance to ask Treasury Secretary Janet Yellen about the idea of a new office focused on fraud prevention, and I was encouraged to hear say she thought it was “well worth considering.”
Congress can also help by taking some additional steps.
First, Congress should direct the Federal Communications Commission to establish a database of reported spam text messages. Today, when you report a spam message on your mobile phone, that information is shared only with the telecom carriers. By creating a searchable government database, similar to existing FCC databases, legitimate businesses like banks can use it to identify the bad actors impersonating them, put a stop to it and ensure the links and phone numbers they’re asking you to contact don’t work.
Second, we need to better engage state and local law enforcement in fighting financial crime. Texas provides a good roadmap. It recently established the Texas Financial Crimes Intelligence Center. The FCIC is a state agency with a mission to protect consumers from financial crime by coordinating law enforcement investigations, providing training and working with industry partners.
Since its inception in 2022, the FCIC has become a force multiplier by creating an expert cadre of law enforcement personnel with specialized capabilities who can work at the local level and with federal officials to target and prosecute financial criminals. Congress should work with the states to create an FCIC in every state.
We also need the telecom, social media and other industries to make it harder for the bad guys to impersonate a bank on their platforms. If we’re in this together, we stand a chance of winning.
In the meantime, America’s banks will continue to do what they can.
Today, banks across the country are joining together to support unprecedented public education campaigns designed to empower bank customers to spot fraud and scams before they can do any damage. ABA’s award-winning #BanksNeverAskThat campaign uses humor to let consumers know that their bank will never ask for sensitive information like your pin or password via phone, text or email out of the blue.
Our new #PracticeSafeChecks campaign responds to the explosion in check fraud which has doubled since 2021, even as the use of checks has dropped by 25%. The campaign offers tips on how to use checks safely, while encouraging consumers to use banks’ digital payment options whenever possible, which are safer and more secure.
Given the pervasive problem of check fraud, ABA is also conducting a feasibility study to explore the creation of a system that would enable banks to verify a check in real time before accepting it for deposit — stopping fraud before it occurs.
The ABA Foundation’s Safe Banking for Seniors campaign arms frontline bank employees with tools to spot elder financial abuse, which unfortunately is also on the rise.
We’re also turning to technology. ABA recently launched a database of bank fraud contacts to more efficiently resolve potential fraud claims between banks. Recently the database helped a small bank in Mississippi work with a large institution to recover $71,000 for a customer. More than 2,100 banks are part of the database, and that number continues to rise.
Individual banks are also investing millions in their own fraud detection tools, including the use of artificial intelligence to make the criminals’ jobs even harder.
There is more we can all do to fight fraud, including banks, but unless we get serious and start working together more effectively, the bad guys will keep winning.
ABA Viewpoint is the source for analysis, commentary and perspective from the American Bankers Association on the policy issues shaping banking today and into the future. Click here to view all posts in this series.
