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NewsBriefs

This article contains excerpts from news stories recently posted under every $1 lost to fraud. With digital services expanding—
Breaking Industry News on our homepage. For links to these and other driving more than half of retail revenues and one-fifth of
full news stories, please visit www.greensheet.com/breakingnews. transaction volume—cybercriminals are adapting, lead-
php. ing to increases in overall fraud levels for consumers and
ecommerce and brick-and-mortar businesses, researchers
noted. More than half of surveyed organizations reported
a 6 percent increase in fraud, with digital channels re-
sponsible for 53 percent of overall fraud, they added.

Fraud impact extends to fines, fees, goods lost/stolen, and

Nacha targets 'push' payment fraud customer experience, affecting conversion rates for 75 per-
cent of organizations participating in the study. Balanc-
Nacha, the automated clearing house rules group, ap- ing customer experience with fraud prevention remains
proved new rules aimed at enhancing fraud monitoring a challenge, exacerbated by emerging payment methods
for ACH credit payments. The new rules are designed to and rising fraud risks.
enhance fraud detection from payment origination to re-
ceipt, enabling remedial actions such as payment returns Scams drive a significant portion of fraud losses despite
and transaction monitoring, including for payroll trans- efforts to educate consumers. Buy now, pay later transac-
actions. tions account for 37 percent of fraud losses, but credit and
debit cards contribute most to fraud losses due to their
While liability for fraudulent payments remains un- widespread use and data breaches. Most fraud occurs
changed under the new rules, financial institutions re- during new account openings due to identity theft. Lexis-
ceiving ACH payments now have a defined responsibil- Nexis emphasized the importance of a seamless customer
ity to monitor transactions for fraud, marking the first experience and agile risk assessment to combat emerging
explicit involvement in combating fraud for these institu- fraud trends and meet consumer expectations.
tions. The rise in ACH fraud incidents, especially in credit PayPal ruling lifts all digital wallets
fraud, prompted Nacha's focus on managing credit risk
fraud. Common fraud methods resulting in significant fi- A federal judge's ruling on March 29, 2024, resolved a
nancial losses include business email compromise (BEC), four-year dispute between PayPal Holdings Inc. and the
vendor impersonation and payroll fraud. The FBI received Consumer Financial Protection Bureau regarding fee
numerous BEC complaints totaling billions of dollars in structures and disclosures for digital wallets and prepaid
losses in 2023. cards.

Jane Larimer, president and CEO of Nacha, emphasized Judge Richard L. Leon agreed with PayPal that digital wal-
the collective responsibility of all ACH network partici- lets are distinct from "general purpose reloadable (GPR)
pants in reducing fraud occurrences. Educational resourc- cards" and shouldn't be regulated similarly. James Huber
es and implementation guidance will accompany the new from Global Legal Law Firm commended the decision,
rules. Although the rules pertain specifically to ACH pay- highlighting improved communication between the pay-
ments, their principles are relevant to various credit push ments industry and the judiciary. The ruling underscores
payment types. the courts' evolving understanding of digital payments,
Merchant fraud costs $3 for each dollar lost acknowledging the differences between digital wallets
and prepaid cards despite similarities.
The LexisNexis true cost of fraud study revealed that mer-
chants in the United States and Canada suffer a $3 loss for Judge Leon emphasized that digital wallets store cre-
dentials electronically, rarely hold balances and typi-
Also find us on Facebook, cally don't charge fees for account maintenance. PayPal
maintained that the CFPB's fee disclosure requirements
LinkedIn & Twitter for the for digital wallets were unjustified, citing material differ-
most up-to-date stories, ences between the products. The court rejected the CFPB's
can’t miss events and newest assertions that regulation was necessary due to potential
industry announcements. future changes in digital wallet fees or characteristics.

Huber questioned the need for the CFPB's proposed rule,
noting existing coverage under the Electronic Fund Trans-
fer Act and Regulation E. He emphasized the importance
of specificity in regulatory measures, advocating for a nu-
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