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About


Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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December 7, 2020

2020: The Year in Payments

Each year, the Risk Forum produces a year-in-review webinar. Every Risk Forum member helps plan the webinar, bringing together everyone's unique expertise and perspectives. During the year, each of us engages with a different area of the payments industry and initiatives, which leads to good-natured debate when it comes time at year's end to rank important payment topics. (If you are an avid follower of our blog, you might be able to guess who is pulling for which topics.) This year was a little different, though. We could not think about payments without also considering the heaviness and impact of the COVID-19 pandemic.

Our 2020 webinar will dig into key payment issues that are responses to the pandemic, or opportunities or challenges resulting from the pandemic. The goal is to share our analysis of the data collected over the past year, parse out trends that may have started during the pandemic but might be here to stay, and engage with our audience on where focus should be as we prepare to turn the page on this year and start a welcomed new year.

We will first answer this question: How have businesses' and consumers' payments behaviors adapted over the course of the year? There have been plenty of headlines covering retail trends both in-person and online or e-commerce. The Risk Forum will share details and data about retail payment trends while unpacking the nuances of the underlying technologies that facilitate retail payments. Also in this category are person-to-person and business-to-business payment trends, which we'll highlight, too.

New to the year-end webinar agenda is a focus on cash and coin. We'll share data on consumer cash usage and holdings along with unintended consequences, such as how currency demands have affected ATM operations. Another aspect of currency is how demand for cash this year has caused a coin supply distribution issue, sometimes incorrectly referred to as a coin shortage. The Forum will address the myths about the coin supply distribution issue and share insights from the work by the U.S. Coin Task Force.

These conversations about retail trends and currency demand are followed by another critical discussion, this one about financial inclusion opportunities that have been accelerated by the pandemic. The Atlanta Fed is working to emphasize how digital payment innovations can affect cash-based and vulnerable populations. We will highlight how recent events such as the distribution issues related to stimulus money and general financial support among family and friends have brought additional attention to financial inclusion. We will also share our research on this topic and talk about what steps we are taking toward creating solutions.

Not new to the agenda, unfortunately, will be coverage of fraud challenges. This year, we'll talk about scams that are capitalizing on pandemic responses. There have been several big fraud trends, relating to Paycheck Protection Program loans and Economic Impact Disaster Loans, unemployment benefits, fundraisers for fake charities, and PPE supplies (counterfeit). Rest assured: we will also highlight advancements in fraud defense tools, especially in ecommerce.

Please join us for the 2020 Year-in-Review webinar, our last Talk About Payments webinar for the year. This session will take place on December 17 from 1 to 2 p.m. (ET). To participate in the webinar, you must registerOff-site link in advance (there is no charge).

September 21, 2020

Personal Responsibility for Irrevocable Payment Scams

Those who have experience with parenting know that with many joys come challenges. For me, one of those challenges is teaching my children the importance of personal responsibility. Picking up after themselves, making sure their chores are finished before running out the door to play, and owning up to mistakes are just some of the personal responsibilities that they struggle with daily. And while there is a light at the end of the tunnel for this struggle, I firmly believe it is their having to experience the consequences that is getting us there. In this parent's opinion, knowing there are consequences for their actions helps children become responsible.

You might be thinking, "What does this notion of teaching personal responsibility have to do with payments?" Earlier this year, my colleague Dave Lott started the dialogue among those of us at the Risk Forum, and perhaps within some of our readers' circles, when in a post he posed the question "What is the likelihood that similar protections will be extended to consumers here (United States)?" The post was related to the extension of consumer protections in the United Kingdom to combat its growing problem of authorized push payment (APP) fraudOff-site link.

In August, a UK-based consumer advocate organization called Which?Off-site link released a research reportOff-site link based on the experiences of 150 consumers related to the Contingent Reimbursement Model (CRM) Code adopted by many financial institutions in the United Kingdom in 2019. The CRM Code has two primary goals: to reduce the occurrence of APP fraud and, for the fraud that occurs, to reduce the impact. Many of these scam payments in the United Kingdom are occurring on their faster payments rail, which was designed to make payments immediate and irrevocable. The report concluded that consumers' experiences with reimbursement for APP scams were mixed. Some consumers were reimbursed by their financial institution after authorizing payments to scammers while others were unable to receive any reimbursements.

The primary payment instrument in the United States today for large-scale corporate APP scams is wire. For consumers, person-to-person (P2P) services such as CashApp, Venmo, and Zelle are being used to scam individuals out of money. All these payments, both business and consumer, are irrevocable. Once the payments leave their accounts, neither the financial institution nor service provider has liability. But should individuals in the United States, like those in the United Kingdom, be afforded protections for these wire and P2P payments if they're scammed? And should these protections also apply to newer real-time payment schemes here in the United States?

My personal belief is that financial institutions or P2P services should not be responsible for people who fall victim to APP scams. Their responsibility should be limited to educating their customers on the rules around these payments and their finality when executed. APP scams are often the result of social engineering campaigns, and I am of the thought that, just as I expect my children to accept personal responsibility for their mistakes, it's fair for consumers to accept their responsibility for making sure they do not become the next social engineering victim. Do you think this is a reasonable approach to these scams and payments? Or should the United States banking industry and regulators move toward a model like the United Kingdom has in place?

September 14, 2020

You've Discovered a Money Mule: Who You Gonna Call?

The movie Ghostbusters is not a favorite of mine, but many people view it as a classic. While we can debate its status as a classic, there is no debate that it has one of the most well-known lines of any theme song in all of Hollywood: "Who you gonna call?"

The lyrics from this song were the recent topic of discussion among my colleagues as I shared with them that a banker had reached out to me about a fraud scheme that affected his customers. As he researched this scheme, he identified the involvement of a money mule using multiple accounts at two different banks to deposit funds from fake or counterfeit checks. His research also led him to a website that appears to be dedicated to hiring money mules to launder money. In this particular case, the banker rightfully contacted the two institutions where the fraudulent funds were deposited to inform them of the scheme and their potential money mule customer.

The banker asked, "What should I do now?" And "Who do I need to call?" After discussing with my Risk Forum colleagues, I made several recommendations to the banker about what to do and whom to contact:

  • Contact law enforcement, both the local law enforcement office and the local Federal Bureau of Investigation office.
  • File a Suspicious Activity Report with the Financial Crimes Enforcement NetworkOff-site link.
  • If your financial institution is part of the Financial Services Information Sharing and Analysis Center (FS-ISAC)Off-site link, report the money mule to the fraud intel or payments risk group.
  • In addition to reaching out directly to the FBI, file a complaint through its Internet Crime Complaint CenterOff-site link.
  • If your financial institution is part of a regional payments association, report the mule to the association as many of these associations send out money mule and fraud alerts to their members.
  • Finally, report the suspected money mule recruitment website to the Federal Trade CommissionOff-site link by filing a complaint either through its online system or by calling 877-FTC-HELP (877-382-4357).

Earlier this year, my colleague Dave Lott blogged about efforts by law enforcement officials to crack down on money mules. As the example I'm describing here shows, the effort to bring down mules must be collaborative. As part of this collaborative effort, banks and other financial institutions have a critical role to play in identifying mule accounts and sharing this information with law enforcement as well as with each other. To those like the banker who reached out to me and other financial institutions that identify money mules, don't remain silent. In the immortal words of Ray Parker Jr., "If there's something weird, and it don't look good, who you gonna call?" Make the call to law enforcement and others to bring these mules and hopefully the larger criminal organizations behind them down.

July 27, 2020

SNAP Gets Snappier and Offers Ecommerce and Fraud Prevention

In April 2019, the USDA launched the Supplemental Nutrition Assistance Program (SNAP) online purchasing pilot programOff-site link, which allows participants to purchase groceries online. What began as a two-year pilot program in one state with a gradual rollout to additional states is now available in 40 states (with five additional states granted approval and in the planning phase). The COVID-19 public health emergency, which has made access to online grocery shopping critical, expedited the program's deployment. The USDA also rolled out the Pandemic Electronic Benefits Transfer (P-EBT) program as a SNAP extension. With P-EBT, children in low-income households continued to receive the free or reduced-priced meals that they would normally have received in school during the 2019–20 school year.

This is certainly a positive move toward advancing ecommerce inclusion. However, more ecommerce transactions present more fraud risks and opportunities for criminals. (My colleague Doug King blogged a few years ago about fraud risks SNAP was already experiencing, including trafficking.) To mitigate some of these ecommerce risks, the Department of Agriculture's (USDA) Food and Nutrition Service (FNS), which administers SNAP, has increased security for online EBT card use. SNAP benefits and P-EBT benefits are both delivered on PIN-enabled EBT cards that function like prepaid debit cards. Retailers must use a USDA-approved, third-party processor that offers secure PIN-on-glass entryOff-site link for online purchases. When customers transact online using their EBT card, they must enter their EBT PIN to complete their purchase. In addition, retailers must successfully meet the FNS's stringent technology and testing requirementsOff-site link.

Unfortunately, these technology and testing requirements to integrate a secure online purchasing environment with the grocer's EBT benefits system are extensive and cannot be done overnight. As a workaround until retailers can fully integrate their systems, the USDA recommendsOff-site link that SNAP customers take advantage of existing services like "pay at pickup," where customers place grocery orders online and pay with their SNAP EBT card when they get their groceries—which allows them to follow both social distancing and ecommerce fraud-prevention guidelines.

The USDA's SNAP Fraud FrameworkOff-site link offers states resources to help them proactively identify potential fraud and suggests best practices on fraud prevention and mitigation. You can learn more about the USDA's efforts to manage fraud risk by visiting their websiteOff-site link