Bank Associations Call for Industry-Wide Collaboration to Combat Scams

Four banking associations have urged for collaborative efforts across the industry to combat fraud as banks cannot single-handedly prevent criminals from defrauding customers or financial institutions.

The American Bankers Association, Bank Policy Institute, Consumer Bankers Association, and National Bankers Association said despite banks’ relentless efforts to identify and report suspicious activities and educate customers about common scams, they cannot tackle this challenge alone.

Therefore, they have called for a “multiprong”, cross-industry approach to address the problem.

This involves enhancing collaboration with law enforcement and regulators, improving consumer education and developing a national strategy for preventing and responding to scams and fraud.

A cross-industry approach is also needed because criminal activities impact more than just the banking sector, so efforts to combat fraud and scams must also span multiple industries.

In a joint letter, the coalition, said:  “Banks are but one contributor to the overall safety and security of the payments ecosystem, and cannot single-handedly prevent criminals from defrauding consumers or financial institutions.”

They added the government must play a role in protecting the payments ecosystem. For example, when customers are tricked into transferring money to criminals or packages containing checks are stolen from the mail, banks face limitations in their ability to protect customers.

The coalition added that a holistic approach is also needed, alongside a cross-industry approach.

They said:  “Each step in the scam ecosystem — from how a scammer identified consumer targets, to how a scammer communicates instruction to a victim, to how the money is processed — offers an opportunity to stop the flow of funds to the criminal.”

Therefore, focusing on only one aspect or step in the process will not curb the rise in scams. Instead, a holistic approach that addresses all the entities and elements of a scam is more likely to succeed.