Finance & Banking , Fraud Management & Cybercrime , Industry Specific

US Moves Toward Expanding Reg E to Address Payment Fraud

Recent developments suggest the U.S. is taking a more serious approach to holding faster payments platforms accountable for scams. It's unlikely any changes will happen before the U.S. election in November, but the move toward more regulation is a good start, said Ken Palla, fraud expert and retired director with MUFG Bank.

See Also: The Rising Threat of Fake Business Accounts

One key development is the proposed expansion of Reg E, which would require banks to reimburse customers for scams related to authorized transactions. "The intent of the expansion of Reg E is to add scam transactions to be part of the reimbursement. So, basically, to add these authorized transactions, which could be romance scams, investment scams, purchase scams. There's a whole bunch of different scams," Palla said.

The expanded regulations could also affect retail wires and telephone-initiated transactions, which were previously excluded from Reg E.

In this video interview with Information Security Media Group, Palla also discussed:

• The Consumer Financial Protection Bureau's ongoing audit of major banks' reimbursement practices;
• How U.K. and Australian regulatory efforts could serve as models for U.S. reforms;
• Why it's importance that banks implement robust money mule management and scam detection controls.

Palla helped shape the initial responses to the U.S. 2005 and 2011 FFIEC Regulatory Guidance to improve online security for U.S. banks and served as an adviser to the RSA Conference eFraud Global Forum. He previously served as a member of the program committee for the annual RSA Conference in San Francisco.