OCC, FDIC encourage banks to share data on fraud

Federal regulators are giving banks a greener light to share information about suspicious activity and fraud. This move by the OCC and FDIC follows updated guidance on the PATRIOT Act. It expands the 'safe harbor' protections for lenders. This means banks can exchange data more freely without the same level of legal risk they faced previously. For retailers and merchants, this is a double-edged sword. On the positive side, better data sharing between lenders usually leads to better fraud detection at the point of sale. If a scammer is hitting multiple financing providers, the industry can now flag them faster. Your business is less likely to deal with the fallout of fraudulent applications that lead to chargebacks or cancelled contracts. On the flip side, this could lead to more friction for legitimate customers. As lenders tighten their data-sharing networks, their automated systems may become more sensitive. You might see a slight increase in manual reviews or declines if a customer’s data triggers a flag elsewhere in the banking system. It is important to keep your sales team informed that these background security protocols are tightening. High-tech fraud prevention is becoming the standard for any lender providing consumer credit at your checkout.

Source: American Banker — Top News

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