ABA Testifies at Senate Banking Committee Hearing on Scams and Fraud in the Banking System

The American Bankers Association testified today on banks’ extraordinary efforts to protect their customers from increasingly sophisticated fraud threats and shared ideas with lawmakers to bolster the fight against fraud. Paul Benda, ABA’s executive vice president of risk, fraud and cybersecurity testified on behalf of ABA before the Senate Committee on Banking, Housing and Urban Affairs at a hearing titled, “Examining Scams and Fraud in the Banking System and Their Impact on Consumers.”

“Our members know that fraud takes a financial and emotional toll on their customers, and banks are making extraordinary efforts to protect and safeguard customer accounts as fraud has become more sophisticated,” said Benda. “Unfortunately, however, the fight against these criminals is one that the banking industry cannot win on its own. We believe that a unified, cooperative effort between banks, law enforcement, regulators and other stakeholders offers us the best chance to fight back against fraud and protect consumers.”

In his written testimony, Benda described the current fraud landscape targeting banks and their customers and outlined four key areas that will enhance banks’ anti-fraud efforts and reduce losses:

• Increase Consumer Education – Securing someone’s account doesn’t help if they can be convinced to willingly hand over their money or their login credentials.
• Close Loopholes to Stop Impersonation Scams – Too many loopholes, such as phone number spoofing, exist allowing criminals to impersonate legitimate businesses and agencies.
• Improve Information Sharing – Criminals have an active information sharing ecosystem that banks and the public sector must match to try to slow the flow of illicit funds.
• Enhance Collaboration with Law Enforcement and Regulators – Law enforcement plays a critical role in stopping fraud and ensuring perpetrators are prosecuted and prevented from further activity. 

Benda emphasized that every player in the fraud ecosystem must play a role.

“While banks need to have the technology and infrastructure in place to defend themselves and their customers, they can only provide the leads necessary for law enforcement to track down the perpetrators,” said Benda. “Banks also need the telecom companies and their regulators to close regulatory loopholes that allow criminals to spoof legitimate names and phone numbers to convince customers they are speaking with a bank. Banks need social media companies to proactively root out accounts pretending to be bank employees or financial advisors to convince people to put their money into their investment scams. Banks need the postal service to improve the security of the mail system so that when someone mails a check, it won’t get intercepted, stolen, altered and cashed by the criminal.”

Benda stressed the need to punish the criminals perpetrating these crimes.

“Most importantly, banks need strong partnerships with law enforcement, so the resources to combat these crimes match the amount of money being stolen from consumers,” said Benda. “And when these criminals are caught, the punishments must match the crime, so these offenders won’t continue to steal from American consumers and businesses.”In his testimony, Benda also explained the work that is already being done in these areas including banks’ investments in new technologies, ABA’s extensive efforts to mitigate the unprecedented rise in check fraud and award-winning consumer protection campaign #BanksNeverAskThat, as well as the industry’s close coordination with law enforcement and regulatory agencies.

“The goal of all banks is to help their customers have a safe and secure financial future, and ABA and America’s banks are ready to help protect our customers from fraud.”

Read Benda’s full testimony: https://www.aba.com/advocacy/policy-analysis/aba-testimony-on-scams-and-frauds-in-banking-system