Finance & Banking , Fraud Management & Cybercrime , Industry Specific
How To Reduce Authorized Payment Fraud
David Lott of Atlanta Federal Reserve on What Makes These Scams Hard to Detect
What makes authorized payment scams hard to detect? David Lott, payments risk expert with the Federal Reserve Bank of Atlanta, says the speed and volume of transactions hinders banks in monitoring for fraud, which makes criminals very happy.
See Also: Best Practices to Protect Communication and Email Fraud with Technology
He says leveraging technology to monitor transactions - even if it makes a transaction take 10 minutes instead of 10 seconds - is a good way to balance speed and security.
The U.S. Consumer Financial Protection Bureau reportedly plans to release new guidance requiring banks to compensate consumers for certain money-transfer service scams, but Lott believes penalizing banks will not help solve the problem. Customer accountability is necessary, he says. "There needs to be accountability for all parties in a transaction."
What will help customers, he says, is education about scams and reminders to only send money to people you know and trust.
In this video interview with Information Security Media Group, Lott also discusses:
- Monitoring transactions on an automated basis to identify suspicious behavior;
- The limitations of Regulation E when it comes to authorized payment fraud;
- How to provide more protection without releasing consumers from accountability.
As a retail payments expert with the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, Lott works with payments stakeholders in researching emerging and existing payment systems and products, focusing on risks and mitigating strategies. He has more than 40 years of experience in the retail banking and payments industries.
