Fed unveils new tool to detect fraud in payments
The overall rate of payments fraud, by value, has risen in in the US in recent years
States like Massachusetts and Washington have reported a rise in cases of unemployment fraud, amounting to millions in fraudulent claims paid. FOX Business' Edward Lawrence with more.
The Federal Reserve on Thursday rolled out a new tool to detect fraudulent activity and better understand how it happens across the payments industry.
The FraudClassifier model is a set of tools and materials that create a more consistent way to classify fraud. It was developed by the Fraud Definitions Work Group.
CORONAVIRUS PANDEMIC POSES A NEW THREAT TO US ECONOMY: A COIN SHORTAGE
According to the U.S. central bank, the tool will help organizations classify fraud independently of payment type, payment channel or other payment characteristics.
Payment fraud typically involves the use of stolen credentials or the exploitation of a security vulnerability in credit and debit card networks, including non-prepaid and prepaid debit card networks, the automated clearinghouse transfer system, and the check clearing system.
UNEMPLOYMENT FRAUD SPIKES ACROSS US AS STATES RUSH TO PROCESS APPLICATIONS
The overall rate of payments fraud, by value, has risen in the U.S. in recent years. And as the number of payments has risen, so too has the likelihood that a payment is fraudulent. Still, in 2018, payments fraud remained rare and represented just a fraction -- 1 percent -- of the total value of all payments.
FED'S POWELL WARNS 'SIGNIFICANT' NUMBER OF AMERICANS COULD REMAIN UNEMPLOYED AFTER VIRUS RECOVERY
The new tool unveiled by the Fed presents a series of questions to users, starting with who initiated the payment to determine whether it was an authorized or unauthorized user.