Rep. Young Kim (R-Calif.) has introduced legislation to allow financial institutions to place extended holds on suspicious checks and wire transfers while fraud claims are investigated.
Financial institutions are currently required to make funds available within a prescribed timeframe, even when a transaction raises red flags, according to a statement by Kim, who is a member of the House Financial Services Committee. The Strengthening Transaction Oversight and Preventing, or STOP, Payments Fraud Act would give financial institutions additional time to investigate flagged checks and wire transfers before funds are released.
“Check fraud can wipe out a family’s savings overnight while leaving financial institutions responsible for covering the losses,” Kim said. “Our laws shouldn’t force banks to release funds before they have the opportunity to investigate suspicious transactions. The STOP Payments Fraud Act gives financial institutions the time they need to stop fraud before it happens and better protect Americans’ hard-earned money.”
