Risk experts tell Congressional banks need to unify fraud

The House Financial Services Committee’s hearing on the Subcommittee on Oversight and Investigation, titled “Focus on Fraud: Exposing Financial Threats to American Family,” brings together experts to discuss the changing nature of fraud, as well as the limitations of banks with current technology and the collaboration strategies needed to combat fraudsters.

Gen Digital, Inc. Lifelock general manager Ian Bednowitz called fraud “an escalation at an exponential rate that puts more people at risk every day” because more than 75% of cybercrime originated in scams and social engineering.

Paul Benda, executive vice president of risk, fraud and cybersecurity at the American Bankers Association (ABA), highlights the way fraudsters work together for target banks and their clients. “From using groundbreaking technologies such as generative artificial intelligence (AI) to old-fashioned theft of mailboxes, bad actors are relentlessly pursuing multiple ways to defraud consumers and small businesses of money, he said in his testimony, because he said in his testimony: “The criminals divert these criminals from the savage attack and the power of occupying them to shift their tactics to the savage attack and putting them in the scope of force, which is the focus of the focus. Transfer of funds. “Checking fraud is a major area of ​​concern.

“Banks can't win alone,” he said.

Rep. Dan Meuser (R-Penn.), chairman of the subcommittee, provided a similar view, who said in his opening remarks: “No actor can stop fraud by himself. To truly protect families, we must foster collaboration among all stakeholders. Including partners in federal, state and local governments, including the financial sector, and working with technology platforms and technology platforms and telecom companies.”

Encryption and P2P scams

Kate Griffin, director of the National Fraud and Scam Prevention Task Force for the Aspen Institute’s Financial Security Program, said crypto scams are growing, and in her testimony she cites 2024 FBI data that will be closely related to the overall losses associated with various scams. TOLL. She also noted that “call centers, impostors and AI-generated scams are expanding rapidly.”

Carla Sanchez-Adams, a senior attorney at the National Consumer Law Center, said mobile and banking channels pose special risks as the increase in P2P fraud is taking advantage of “newer payment technologies.” In her advice: consumers should be liable for fraudulent transfers; financial institutions should also repay them, which allows criminal fraudsters to obtain fraudulent payments.

Limitations of current technologies and frameworks

Despite the substantial investments in security, witnesses told lawmakers that there are large limits in their ability to combat fraud on their own, often due to technical limitations, regulatory gaps and psychological factors of scams. Bednowitz said artificial intelligence (AI) is a “bilateral sword” because it is exploited by fraudsters, even as banks are using the technology to strengthen their defenses.

The best way to combat fraud: the “holistic ecosystem” approach

Witnesses converge on the need for a comprehensive, collaborative and multifaceted strategy that goes beyond banks, including governments, technology companies and consumers.

ABA's BENDA advocates “the whole ecosystem approach, which means every entity that is a scam life cycle has a responsibility to protect consumers.” Similarly, Griffin advocates private/public sector collaboration and simplifies data collection and analysis through a single reporting portal.

During the retreat with witnesses, Rep. France Hill (R-Ark.) noted that fighting fraud is similar to the efforts of “whipping Moore” and sending out lender scams, especially those tied to fuel pumps. He said the issuer faces people absorbing these losses and asked the merchant what steps should be taken to help STEM sales fraud. Griffin replied that many emerging technologies could be deployed to detect plunder efforts and said coordination, especially in law enforcement, would have great benefits.