This week, Independent Community Bankers of America (ICBA) testified before Congress on legislative and regulatory recommendations to help community banks combat fraud and scams.
Testifying before the House Financial Services Committee’s Subcommittee on Financial Institutions, Gay G. Dempsey—the CEO of Bank of Lincoln County in Fayetteville, Tenn.—said the fraud problem is urgent and must be fought through coordination among financial institutions, law enforcement, and government at every level. To illustrate the need for an effective response, Dempsey shared stories of individual and small business customers who had been victimized by different types of scams, including romance scams and other imposter scams originated through social media and checks that had been stolen in the mail and altered.
“Community banks are uniquely positioned to prevent, detect, and mitigate fraud and scams and take this role very seriously,” said Dempsey, who is a member of ICBA’s Fraud and Scams Task Force. “As relationship bankers, community banks know their customers in real and meaningful ways. These relationships promote access to services, prevent fraud on the front lines, and give customers a personal resource when they fall victim to fraud or scams.”
Noting ICBA’s support for recent administration initiatives to combat fraud, Dempsey advocated additional regulatory changes, such as:
- Allowing longer hold times and clearer guidance under Regulation CC for check deposits to help identify suspected payments fraud;
- Instituting an appropriately tailored interbank dispute resolution process that would enable community banks to pursue check fraud claims more efficiently; and
- Ensuring Federal Reserve check services that help catch fraud are not discontinued.
During Dempsey’s testimony, ICBA also weighed in on several bills before the committee, including the ICBA-supported STOP Fraud Act to amend the Expedited Funds Availability Act in the case of fraudulent checks or wire transfers and the Bank Fraud Technology Advancement Act to require federal banking regulators to study the use of advanced technologies in fraud detection and prevention.
The ICBA said it has spearheaded and strongly supports numerous efforts to combat check fraud, including by:
- Partnering with the U.S. Postal Inspection Service to offer community banks educational materials to help consumers safeguard their financial assets;
- Supporting the Trump administration’s efforts to address the Treasury Department’s use of paper checks;
- Spearheading a Fraud and Scams Task Force of community bankers and state association partners focused on information sharing and industry collaboration;
- Offering community banker resources on check fraud—including guides and online courses—on the ICBA website; and
- Supporting the growth of instant payments options like the FedNow Service, which allows for efficient payments and immediate funds settlement while mitigating risks to the financial system.
