Federal Regulators Looking Into Payment Fraud

Banks are aware of the scourge of payment fraud on their institutions and customers. This blog previously covered ways that banks can deal with check fraud and issues to watch out for in electronic fund transfer fraud cases. Even when banks are not liable to customers for the fraud, the loss of customer funds to fraudsters can undermine a customer’s confidence in the banking relationship.

Federal regulators are now looking for ways to help. In a June 16, 2025, release, the FDIC, OCC, and Federal Reserve announced they are seeking comments from the industry regarding the following:

• External collaboration among the agencies and industry stakeholders;
• Consumer, business, and industry education by the agencies to educate about payments fraud;
• Regulation and supervision to mitigate the harms from payments fraud, including opportunities the Board may have related to check processing;
• Payments fraud data collection and information sharing; and
• Federal Reserve Banks’ operator tools and services to reduce payments fraud

Comments are due 90 days after publication of this notice, which is September 14, 2025.

The causes of payment fraud are multifaceted, but fundamentally the problem begins with the priority that the U.S. financial system places on speed over accuracy in payments. Regulation CC, UCC Article 4A, and Regulation E, among others, all contribute in their own way to create a prime environment for payment fraud. When payments go out, the process of bringing them back is often difficult and time consuming.

There will always be a tension between security and efficiency. Collaboration with federal regulators will be welcome if it does not place the onus solely on banks to combat fraud. Further formalizing channels between institutions to try to clawback funds would help institutions deal with the consequences of fraud.