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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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March 30, 2020

Do We Use a Payments Risk Thermostat?

I read a blog post last week that is eerily evocative of the individual actions we take—or don't take—to protect our personal and payments information. You can read it here: Handwashing Can Stop a Virus—So Why Don't We Do it?Off-site link

The blogger identifies some reasons we don't wash our hands as much—or as thoroughly—as we should, including lack of awareness and inconvenience.

  • We are not aware that hand washing is so effective.
  • We balk at the least inconvenience or practical barriers—for example, having to take a few extra steps to get to the soap and water.

Sounds a lot like the reasons people may cut corners on payments security. For example, people may not be aware of the efficacy of credit freezes, or they might find imposing them to be inconvenient. People may not be aware that it is not optimal to use the same password for multiple accounts, or they may consider it to be inconvenient to set up different passwords.

I think this paper positing a "risk thermostatOff-site link" applies not only to handwashing but also to payments security. We use our risk thermostats to make tradeoffs, so taking one kind of preventive measure could increase our willingness to accept more risk in another way. The author writes: "individual risk taking decisions represent a balancing act in which perceptions of risk are weighed against propensity to take risk."

So, for example, maybe you start wearing gloves and stop washing your hands so carefully. (Don't do that, please.) Or maybe you put a credit freeze on your accounts at the major credit bureaus and stop watching your bank and card statements so carefully. (Don't do that, either.)

As these writers on behavioral science note, awareness is the first step. So be aware of payments and other financial risks facing your business and your customers during the coronavirus outbreak. Here are some resources you can use to educate your colleagues and customers:

  • U.S. Secret Service Adobe PDF file formatOff-site link: Watch out for phishing scams posing as medical or health providers, charity scams on social media.
  • Federal Trade Commission (FTC)Off-site link: Ignore emails claiming to be from the CDC; ignore online offers for vaccinations.
  • U.S. Securities and Exchange CommissionOff-site link Beware internet and social media promotions claiming that products or services "prevent, detect, or cure coronavirus" and that the stock of providing companies will increase in value.

As of March 16, the FTC and the Food and Drug Administration already have issued warning letters to seven sellers of unapproved and misbranded products.

Best wishes and good health to you and your families. Now, go wash your hands. And check your bank account when you're done.

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