Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.
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June 17, 2019
Performing and Paying in the Gig Economy
Bobby Short at the Café Carlyle in New York City. Hank Williams at Nashville's Grand Ole Opry. A trumpet player in the pit, a pianist at a bar. All these musicians have been gigging—that is, they've performed live for pay. The term gig is thought to be shorthand for engagement and has been around since the early years of the 20th century.
Nowadays, it seems that a lot more workers—not just musicians—gig. In the gig economy, independent workers perform short-term jobs for companies or individuals. Many of us presume that most of those jobs are somehow enabled by technology. Now some counterintuitive data about the gig economy comes from the Federal Reserve's Survey of Household Economics and Decisionmaking (SHED).
The SHED finds that three in 10 U.S. adults did some gig work at least once in the month prior to the survey. The survey defines gigging as selling goods online or renting out property, as well as providing personal services like yard work or ride sharing. Among gig activities, child- and elder-care, cleaning, and property maintenance were most common. Half of gig workers indicated they spent five hours or less on gig work in the month prior.
One finding that surprised me: the gig economy is an offline economy. Compared to the 30 percent of adults who did some gig work, just 3 percent of adults used a website or mobile app to find that work. Said another way, that means that just one in 10 gig workers engage in what this paper from the Boston Fed calls "internet platform-based work."
My immediate reaction: how can that be? I took 15 ride shares in April, one every other day. Surely there are more Uber and Lyft drivers out there. My second thought: my mom gets rides, too. When Mom wants a ride, she makes a call on her landline phone to a gig worker for a local agency that helps seniors live independently. As the SHED report puts it, "Most of [gig] activities predate the internet." Driving, housekeeping, babysitting, and lawn maintenance all have been around for a long time.
And, in fact, the SHED estimate of internet platform-based work is higher than some others, because the work is not limited to providing services. It includes, as noted above, selling stuff via online marketplaces. In comparison, the Contingent Worker Supplement from the U.S. Bureau of Labor Statistics (BLS) finds that in May 2017, 1 percent of workers engaged in "electronically mediated work," defined as "short jobs or tasks that workers find through websites or mobile apps that both connect them with customers and arrange payment for the tasks." (Note that the SHED estimate is a share of adults and the BLS is a share of workers ["employed persons," defined here].)
Like the gigs, some ways to pay for gig work predate the internet. My mom pays her driver directly on the same day with paper. And, in fact, the 2017 Survey of Consumer Payment Choice found that 70 percent of person-to-person (P2P) payments were made with cash or checks.
I pay the ride-share app with a fingerprint through an intermediary. The driver, paid indirectly by me, gets an ACH credit to a bank account or a prepaid card load. Many get paid the same day or right after the ride. About half of those I speak with don't mind the 50 cent fee to get paid sooner.
Two ways to arrange a ride. Two ways to pay. Both relevant in the 21st century.
By Claire Greene, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
June 10, 2019
The ABCs of Elder Financial Exploitation
In 2011, the World Health Organization designated June 15 as World Elder Abuse Awareness Day. So each year, a number of organizations supporting the elderly run educational campaigns throughout the month of June aimed at increasing awareness of elder abuse. This crime has a number of different forms: physical, emotional, or sexual abuse, neglect and abandonment, and financial exploitation.
We covered the growing impact of elder financial abuse in terms of numbers in a post last August. That growth is being driven by a double whammy: the surge in the senior population and the proliferation of available exploitation attack channels, thanks to the internet. Because none of this is likely to slow down for some time, education is critical. As the Retail Payments Risk Forum has stressed before, education is an important element in curbing fraud, and this area is no exception.
Here are some of the more common financial scams targeting the elderly:
- Charity: The victim receives a request, usually over the telephone or in a public place, for donations for natural disaster relief or other good causes, but the funds are not used for such purposes.
- Sweepstakes/lottery: The victim receives a letter, email, or telephone call with the news that they have won a lottery or cash sweepstakes—but they have to pay a tax or administrative fee in advance.
- Home repairs: Someone tells the victim that some aspect of their property needs repair—for example, the driveway, roof shingles, or gutters—and it can be done inexpensively since there is a "crew already in the area." The victim must pay by cash or check in advance, but the crew never appears to do the work.
- Romance: The fraudster, often posing under a false identity, makes romantic overtures and eventually asks the victim to send money so he or she can travel to meet them.
- Tax: The victim receives a phone call from the fraudster claiming to be an IRS agent pursuing back taxes and unless the victim sends funds immediately, they will be subject to arrest. A variant of this scam involves the perpetrator posing as a police officer pursuing unpaid traffic tickets or other infractions.
- Virus: A "technical support" company calls the victim, claiming that a virus has infected the victim’s computer. For the payment of a "modest fee," the company can download software that can kill the virus and protect the computer against future attacks. Often, the software downloaded actually contains some form of malware that may allow the criminal to compromise the banking credentials of the victim.
- Other advance fee fraud: The fraudster requests money to help a relative in jail or stranded on the roadside. The situations are completely false but might contain some element of truth as the scammer may have found information on social media providing a name or that the named individual is out of town.
- Identity theft: The criminal communicates with the victim through social media, telephone, or email to obtain bank account or other information allowing them to attempt a wide variety of fraudulent activities including credit applications, unauthorized account transactions, and more.
- Investments: The victim is convinced to purchase an annuity or some other investment with a supposed lucrative payback.
Sadly, most elder financial abuse is committed by family or other people who are trusted with care of the elderly, which makes the crime more difficult to detect. Such abuses range from the transfer of property or securities to the theft of liquid assets through check writing or ATM withdrawals.
While researching this issue, I was heartened to learn that various organizations are developing or improving software products to help spot potential financial exploitation or to provide training materials. The American Association of Retired Persons recently launched a pilot program for financial institutions called BankSafe. It is a free online training program with educational material presented in different formats, including video games, distributed by the Independent Community Bankers of America and the Credit Union National Association, and, directly, by some financial institutions. In addition, a recent Dow Jones Institutional News article highlighted some fintech products designed to alert trustees of unusual or suspicious activity.
If you know of any valuable programs or organizational efforts to increase awareness of elder financial abuse, please let us know.
By David Lott, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
June 3, 2019
Hitting the Brakes on the Cashless Society
"Reverse ATMs" is a term I learned from reading my colleague Oz Shy's new working paper, "Cashless Stores and Cash Users." At venues that don't accept cash at the register, the patron puts cash into the reverse ATM and a loaded prepaid card comes out. Mercedes-Benz Stadium in Atlanta, for example, is one of the latest venues to adopt this practice.
Speaking of "reverse," I'm sure you know that some states and municipalities are seeking to reverse what may—or may not—be a trend toward brick-and-mortar retailers not accepting cash. Refusing to accept cash has been illegal in Massachusetts, where I live, since 1978. More recent developments:
- Philadelphia will ban cashless stores beginning in July.
- In March, New Jersey outlawed cashless restaurants and stores.
- In May, the San Francisco Board of Supervisors voted to require brick-and-mortar businesses to accept cash.
- Also in May, Representative David Cicilline (D-RI) introduced the Cash Buyer Discrimination Act, which would require businesses all across the United States to accept cash.
These and other proposed laws are predicated on the idea that people without access to payment cards or digital payments are harmed when they cannot make purchases using their payment instrument of choice: cash. Oz's paper adds to the conversation by examining the choices consumers make at the point of sale, depending on their access to different ways to pay.
Using data from the 2017 Diary of Consumer Payment Choice, Oz found that consumers who own different mixes of payment instruments use cash with different intensity to make in-person purchases:
- Diary respondents who own neither a credit card nor a nonprepaid debit card made almost 9 in 10 of their in-person payments with cash, on average. The median share of cash purchases was 100 percent.
- Diary respondents who own at least one credit card and one nonprepaid debit card make about one-third of their in-person payments with cash, on average. The median share was 20 percent.
Oz goes on to calculate the cost to the cash payers who do not have credit or nonprepaid debit cards of switching from cash to a prepaid card. He finds that, all things being equal, for some consumers, using cash would have to cost twice as much as using a prepaid card for the cash users to be indifferent to switching. Oz's conclusion: "A complete transition to cashless stores imposes a measureable burden on consumers who do not have credit or [nonprepaid] debit cards." For perspective, 8.5 percent of respondents with household income below the U.S. median ($61,000) did not have a credit card or nonprepaid debit card in 2017, according to the diary.
As this research shows, cash is important to some consumers. The cashless society could be on a collision course with reality.
May 20, 2019
Could Federal Privacy Law Happen in 2019?
Some payments people have suggested that this could be the year for mobile payments to take off. My take? Nah. I gave up on that thought several years ago, as I've made clear in some of my previous posts. I'm actually wondering if this will be the year that federal privacy legislation is enacted in the United States. The effects of the European Union's General Data Protection Regulation (GDPR) that took effect a year ago (see this Take on Payments post) are being felt in the United States and across the globe. The GDPR essentially has created a global standard for how companies should protect citizens' personal data and the rights of everyone to understand what data is being collected as well as how to opt out of this collection. While technically the GDPR applies only to EU citizens, even when traveling outside the European Union, most businesses have taken a cautious approach and are treating every transaction—financial or informational—that they process as something that could be covered under the GDPR.
A tangible impact of the GDPR in the United States is that the state of California has passed a data privacy law known as the California Consumer Privacy Act of 2018 (CCPA) that is partly patterned after the GDPR. The CCPA gives California residents five basic rights related to data privacy:
- The right to know what personal information a business has collected about them, where it was obtained, how it is being used, and whether it is being disclosed or sold to other parties and, if so, to whom it is being disclosed or sold
- The right to access that personal information free of charge up to two times within a 12-month period
- The right to opt out of allowing a business to sell their personal information to third parties
- The right to have a business delete their personal information, except for information that is required to effect a transaction or comply with other regulatory requirements.
- The right to receive equal service and pricing from a business, even if they have exercised their privacy rights under the CCPA.
According to the National Conference of State Legislatures (NCSL) 17 states have mandated that their governmental websites and access portals state privacy policies and procedures. Additionally, other states have privacy laws related to privacy, such as children's online privacy, the monitoring of employee email, and e-reader policies.
Take On Payments has previously discussed the numerous efforts to introduce federal legislation regarding privacy and data breach notification with little traction. So why do I think change is in the air? The growing trend of states implementing privacy legislation is putting pressure on Congress to take action in order to have a consistent national policy and process that businesses operating across state lines can understand and follow.
What do you think?
By David Lott, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
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May 13, 2019
What Can We Learn about Fraud from the United Kingdom?
In many of my discussions around emerging payments, two topics generally always come up: contactless and real-time payments. And given my interest in payments fraud, the discussion usually steers into two questions: Will contactless payments result in increased card fraud? And do faster payments mean faster fraud? While only time and data will ultimately reveal those answers, we can look to the UK Finance's Fraud the Facts 2019 report for some insight into those questions since the United Kingdom is further along on their contactless and real-time payments journeys than we are.
In the United Kingdom, in-person contactless payments have not led to an increase in card fraud losses. Contactless POS payments, through either a mobile device or a card, represented 36 percent of all card transactions in 2018, yet they accounted for less than 3 percent of overall card fraud losses (and just under 28 percent of the face-to-face fraud losses). The fraud rate on contactless transactions has remained steady and low for three consecutive years at 2.7 basis points, or 2.7 pence (£0.027) for every £100 spent. This compares very favorably to the overall card fraud rate of 8.4 basis points, or 8.4 pence (£0.084) for every £100 spent. Fraud for contactless transactions has been mitigated in the United Kingdom through the establishment of floor limits above which a PIN is required, the requirement of PIN verification after a cumulative spend threshold is reached, and the implementation of a security feature that randomly requires cardholders to input a PIN during a transaction to prove that the cardholder is in fact in possession of the card.
The fraud situation for faster payments in the United Kingdom is not quite as rosy as that of contactless payments. Since 2017, UK Finance began reporting on authorized push payment (APP) fraud. In this type of fraud, which includes email account compromise, a victim is tricked into sending money from their bank account to a fraudster's account. In 2018, APP fraud represented 30 percent of the total reported fraud losses. And of the APP fraud, faster payments was used in 93 percent of the fraudulent transactions and 71 percent of the fraudulent value.
I can't claim that faster payments is driving APP fraud or leading to "faster fraud," but it is rather obvious that faster payments is the preferred payment method of fraudsters conducting APP fraud. This should be an alarm for the payments industry in the United States as we continue on our faster payments journey. To mitigate APP fraud with faster payments in the United Kingdom, the industry is working to implement a new-account name-checking service that Pay.UK has introduced. Confirmation of Payee checks the name associated with a routing and account number. This service is not a perfect solution—it won't help if the fraudster uses or opens an account under the name of the actual intended recipient. But it definitely will prevent fraud losses in cases where the account information does not match the name of the intended recipient, which is currently more often the case than not.
So as we continue moving toward contactless and faster payments in the United States, I think we can learn from those across the pond about the need for controls to mitigate fraud in these emerging payments. Floor limits for PINless transactions and velocity controls are part of the U.S. contactless payments experience, but what about faster payments? Does a name-checking service like the one being implemented in the United Kingdom make sense? What controls should be implemented to help prevent fraudsters from using faster payments to commit APP-related frauds, especially email account compromise?
May 6, 2019
Business Email Compromise Moves Mainstream
The Retail Payments Risk Forum has blogged extensively on business email compromise (BEC) over the past few years. With losses attributed to BEC already in the billions of dollars and the number of attacks increasing over 475 percent from fourth-quarter 2017 to fourth-quarter 2018, the topic warrants continued attention. As the "business email" part of the phrase suggests, businesses and executives of businesses have been the primary targets of this type of fraud. The goal of most of these incidents is to trick businesses into moving funds into the criminals' accounts using wire transfers.
When perpetrators of this fraud scheme experienced great success with businesses and executives as their primary targets, they quickly moved to include ordinary individuals. That is, the fraud has gone mainstream, evolving beyond businesses and executives with wire transfers as the key payment platform. As the scheme has begun to involve employees as victims and reached the person-to-person payment arena, fraudulent transactions are occurring more often using ACH, not just wire transfers. Since BEC is not just for businesses and their executives anymore, BEC is sometimes more aptly referred to as EAC—that is, email account compromise.
In April, CNBC reported a new scheme whereby the fraudsters are targeting the human resources function of businesses to change employees' direct deposit payroll information to an account held by the fraudster. The fraudster either spoofs an employee's email account or gets access to it and then sends a message to human resources requesting a change to the banking account associated with their direct deposit. While the amounts fraudulently transferred in this scheme are generally well below those of the traditional BEC scheme, they are simple and cheap to execute and could become more attractive for criminals.
In more troubling news on this fraud scheme, the Association for Financial Professionals (AFP) reported that the number of businesses reporting that they had been victims of actual or attempted fraud increased significantly for both ACH credit and debit transactions, while instances of fraud involving checks, cards, and wire transfers declined. And what could be the reason behind this increase in ACH fraud? According to a representative with the AFP, "a likely explanation for the higher fraud lies in the popularity of ACH…for schemes like business email fraud."
And as I mentioned earlier, fraudsters aren't limiting this scheme to businesses. In fact, I was a target of an EAC scam earlier this year when fraudsters took control of a relative's email account. But for a bit of good news (at least for me), I was immediately suspicious and a phone call to the relative confirmed that my gut feeling was accurate. This image is a screenshot of the text conversation I had with my "relative."
To piggyback on a recent post by my colleague on using discipline to fight BEC: having the discipline to make a follow-up call to the person emailing a request for funds or a change to bank account information can make the difference between being a victim and being a spoiler.
How are you attacking this growing threat, and what are you doing to educate your employees and customers?
April 29, 2019
In early April in Boston, I happened by the annual conference and competition of the Massachusetts School Bank Association (MSBA). Two hundred eighty-four students from 30 high schools competed in three segments: product design, marketing, and a quiz show that covered financial literacy topics. The MSBA is an association of schools with financial literacy programs and financial institutions that operate educational branch offices in schools.
I learned that next-gen security is firmly within the sights of the next gen of Massachusetts bankers. The conference theme of “personal financial security” played out in each segment. It was clear that the organizers—high school teachers and executives at financial institutions—had the financial safety of the next gen firmly in view:
- The trivia contest consisted of general banking and personal finance questions including questions related to identity theft awareness, financial fraud, and financial cybersecurity.
- The marketing challenge tackled the need to educate customers about security and, according to the prompt, "the need to use good security practices and tools to protect [customers] from identity theft and/or fraudulent use of their accounts."
- In product design, the winning team from Taunton High School designed an app to help students determine if they were more or less likely to be victims of identity theft.
I chatted with students from Chelsea High School about their app: "Are you smarter than a fraudster?" Teaching others is a good way to learn yourself, and these young people were on top of best practices for protecting their payments cards (don't give out info in email or on the phone), preventing identity theft (shred documents), and keeping email safe (don't click on links from unknown parties).
When they aren't designing apps, the Chelsea students work as interns at the Chelsea High School branch of Metro Credit Union.
What is your bank doing to educate the next gen of security ninjas?
April 22, 2019
The Prepaid Rule: All Jokes Aside
A payments compliance rule took effect this year on April Fools' Day, and it occurred to me that when a compliance deadline is approaching, you might not feel like joking around. The Prepaid Accounts Final Rule was issued a few years ago, in 2016, but after a number of postponements, its effective date is finally behind us.
The rule standardizes disclosures, error resolution procedures, consumer liability limits, and access to records. These changes are intended to provide comprehensive consumer protections for prepaid accounts under the Electronic Fund Transfer Act, or Regulation E. The rule is fairly comprehensive, but for the sake of brevity, I'm going to look at only a couple areas of the rule—those that stand out to me.
Consumers can now expect protections over their transaction accounts regardless of whether the account is offered directly by a traditional financial institution or by a third party, such as a fintech or merchant, as they make electronic payments (debit, prepaid, ACH). Also, fintech companies that allow consumers to store funds or are thinking about adding that ability may want to prepare themselves to be designated as prepaid services providers and therefore subject to the regulatory and licensing requirements that go along with that designation. To that point, I am not surprised to see several big names recently listed on the FinCen Money Service Business Registration as "Providers of prepaid access." (To see the list, scroll down the web page to the MSB registration form; on the MSB ACTIVITIES field, click the down arrow to open the dropdown list; select Provider of prepaid access and click the Submit button.)
Established prepaid issuers have long been preparing for the new prepaid rule despite the stops and starts of an effective date and the uncertainty about some of its key provisions. Because consumers open prepaid accounts in a variety of ways—from starting a new job to purchasing prepaid cards at a retail checkout lane—it can be difficult to accommodate the disclosure requirements, such as those for listing fees, that the prepaid rule prescribes. Most issuers have changed product packaging to accommodate the new disclosures. These changes required complicated logistics coordination for the prepaid supply chain to replace old, noncompliant inventory with new, compliant card packages. Some issuers are still grappling with how to list types of fees that may not apply to their particular account program.
Many issuers had already been providing some level of consumer protection from unauthorized transactions before the rule requirement took effect. Now there will be a standard expectation. Limited liability and error resolution benefits need apply only to customers who have successfully completed the identification and verification process, if there is one for their particular program. Regulation E's error resolution and limited liability requirements do not extend to prepaid accounts (other than payroll or government benefit accounts) that have not completed the verification process, one of the key revisions after the rule's initial issue.
The rule will change the way we categorize prepaid services. For instance, in the past, discussion around prepaid products focused on whether the product was open- or closed-loop, and whether it was reloadable or nonreloadable. While those characteristics still exist, they are not necessarily a determinant as to whether the rule applies to a particular product or not. There are clear exclusions for certain products like those that are marketed and labeled as gift cards, health care savings cards, or disaster relief cards. However, even if a product doesn't have "prepaid" on its label, it may still fall under Regulation E. Coverage extends to asset accounts that consumers can use to conduct transactions with multiple, unaffiliated merchants for goods or services, to pull cash from automated teller machines, or to make person-to-person transfers.
For both incumbents and those finding themselves new in prepaid, it has been no joke to prepare to comply with the new rule. Despite the extra burden, do you think we will look back on this milestone favorably in the future? I think the new prepaid rule will lead to strengthening trust and confidence in these products. The Consumer Financial Protection Bureau (CFPB) pledges to be vigilant in evaluating new rules. Moreover, the CFPB is required to submit a formal evaluation five years following a rule's effective date. The industry should be ready to help measure the rule's impact.
By Jessica Washington, AAP, payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
April 15, 2019
For Customer Education, Map Out the Long Journey
Financially savvy consumers are good customers for financial services. They save for retirement and pay back loans. Those are among the findings of research looking into the effects of formal financial education. And, as readers of this blog already know, customer education is central to risk management.
Using data from the National Financial Capability Study, researchers at the University of Nebraska found that financial education encouraged positive behaviors in the long run, such as saving for retirement or setting up an emergency fund. For short-run behavior, which the researchers defined as tasks that "give continual feedback," the evidence was mixed. They hypothesized that, in the short run, people learn good behavior better from getting negative feedback like late fees.
A paper by researchers at the Federal Reserve Board looked at three states (including Georgia, Idaho, and Texas) that began requiring financial education in 2007. Students in school after the requirement was implemented had higher relative credit scores and lower relative loan delinquencies than young people in bordering states without financial education. The effects lasted for four years after high school graduation. Among the goals of the Georgia curriculum is one that says students should be able to "apply rational decision making to personal spending and saving choices" and "evaluate the costs and benefits of using credit." Through age 22, the researchers found that the students who studied personal finance were better off than peers who had not, as measured by relative credit scores and delinquency rates.
What this means: if I learn in middle school that cost should factor into college choice, perhaps I'll decide to take on less student loan debt when it's time to choose a college. If one of my college professors stresses the importance of saving for retirement, perhaps I'll be more likely to make sure I participate in my employer's 401(k) and qualify for its full match. If I receive regular reminders about phishing attacks, perhaps I would be less likely to reply to or open a link in a phishy email.
April is Financial Literacy Month. For parents, teachers, and financial institutions, it's encouraging to know that split-second timing is not necessarily critical to effective financial learning. Financial education need not be delivered at life's crossroads, but everyone should have an overview of the route before getting on the road.
Finally, let me share some tips:
- For parents of young children: Use these parent Q & A resources during story time. They are designed to help you talk about the importance of making careful decisions when saving versus spending and other personal finance topics related to their daily lives.
- For teachers: The Federal Reserve Bank of Atlanta offers professional development programs for teachers, designed to enhance classroom instruction of economics and personal finance, including a free webinar on April 16, "Personal Finance Basics: Classroom Resources."
By Claire Greene, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
April 8, 2019
Insuring Against Cyber Loss
Over the last few months, my colleagues and I have had multiple speaking engagements and discussions with banking and payments professionals on the topic of business email compromise (BEC). Generally, these discussions lead to talk about a risk management strategy or approach for this large, and growing, type of scam. One way some companies and financial institutions are mitigating their risk of financial loss to BEC and other cyber-related events is through a cyber-risk insurance policy. In a recent conversation, someone told me their cyber-insurance carrier mandates that they get an outside firm to audit and assess their cybersecurity strategy and practices, or they risk losing coverage.
According to a recent Wall Street Journal article, some large insurers are even going a step further and collaborating with each other to offer their own assessments of cybersecurity products and services available to businesses. Their results, which they will make publically available, will identify products and services they deem effective in reducing cybersecurity incidents and potentially qualify insured companies with improved policy terms and conditions if they use those products or services.
Cybersecurity vendors who would like their products and services to be assessed must apply by early May. They are not required to pay any fees for the evaluation. In light of the rising number of cyber-related events and increasing financial losses, along with the growing number of legal cases between companies and their insurance providers, this move by the insurance companies makes sense as a way for them to potentially reduce their exposure to cyber incidents. But it will be very interesting to see just how many cybersecurity vendors apply for participation in the program and how effective the insurers are at assessing the vendors' products and services. Moreover, for businesses, just using cybersecurity solutions helps them meet only part of the challenge. How they implement and maintain these solutions is critical to an effective cybersecurity approach.
Also of note in the Wall Street article is a graph that depicts the percentage of a particular global insurance company's clients, by industry, that have purchased a stand-alone cyber-insurance policy. Financial institutions, at 27 percent, rank last. Perhaps they are more confident in their cybersecurity strategies than are other industries, or perhaps insurers have no attractive stand-alone policies for financial institutions.
The cyber threat today is serious. In fact, Federal Reserve Board chairman Jerome Powell in a recent CBS 60 Minutes interview, when asked about a possible cyberattack on the U.S. banking system, responded that "cyber risk is a major focus—perhaps the major focus in terms of big risks."
As the Risk Forum continues to also focus on and monitor cyber risks, we look forward to the public findings from the insurers' collaborative assessment of cybersecurity products and services and will be interested to see if, over time, more financial institutions obtain cyber-risk insurance policies. I suspect the cyber-insurance industry will evolve in the products they offer and will continue to grow as companies look to mitigate their risks in the event of a cyber event.
What are your thoughts on this collaborative effort by the insurers? How do you see the cyber-insurance industry evolving? And do you think more financial institutions (or perhaps your own) will acquire cyber-insurance policies?
By Douglas A. King, payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
- The Future of Fraud in a Post-EMV Chip Environment
- A Tip for Summer Travel
- Ransomware: Hopefully Not Coming Soon to a Computer Near You
- Moving towards Electronic Social Security Number Verification
- Performing and Paying in the Gig Economy
- The ABCs of Elder Financial Exploitation
- Hitting the Brakes on the Cashless Society
- Could Federal Privacy Law Happen in 2019?
- What Can We Learn about Fraud from the United Kingdom?
- Business Email Compromise Moves Mainstream
- July 2019
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- November 2018
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- account takeovers
- ATM fraud
- bank supervision
- banking regulations
- banks and banking
- card networks
- check fraud
- consumer fraud
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- credit cards
- cross-border wires
- data security
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- emerging payments
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- wire transfer fraud
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