A Federal Reserve working group, made up of government and payments industry experts, developed a uniform fraud classification system to address fraud involving Automated Clearing House (ACH), wire, and check payments. The "FraudClassifierSM" model contains tools and information to help stakeholders clarify and track fraudulent activity throughout their organizations.
According to the Federal Reserve, advantages to the payments industry adopting a standardized classification model include:
- consistency in the ways that information about fraudulent payments is collected and tracked;
- clearer definitions of fraud that financial institutions can use to educate customers; and
- the potential to create a "common fraud language" which could facilitate collaboration in the industry to (i) identify and combat fraud across differing payment methods; and (ii) promote a more secure and less costly payments system for the industry as a whole.
Originally published June 19, 2020.
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