Knowledge Center /

FIs Face Regulatory Scrutiny & Increases in Fraud

A recent American Banker article stated, “March’s bank failures mean that even more banks are likely to face regulations or scrutiny from Congress.” Banking institutions are under the microscope and are more than likely subject to further regulations. In a corresponding article, during first-quarter earnings calls, executives from KeyCorp, Citizens Financial Group, and Regions Financial addressed the possibility that regulators would enact stricter rules for regional banks after Silicon Valley Bank’s failure.

Following the financial crisis of 2008, the United States Government responded to the recession by establishing the Dodd-Frank Act and the Consumer Financial Protection Bureau (CFPB). Under the CFPB falls Federal Regulations, including those directly shaping the fraud and dispute management process, specifically Reg E and Reg Z. Given last month’s SVB fallout, as well as increased fraud activity during widespread economic uncertainty, previously lax approaches to upholding federal regulations like Regs E and Z are being exposed. FIs are about to get a regulatory reality check. 

In the PYMNTS 2022 State Of Fraud And Financial Crime In The U.S. Report, two-thirds of FIs have experienced an increase in the volume of financial attacks. Those suffering the most being firms with $5 billion to $25 billion in assets. Moreover, PYMNTS’ data finds that 25% of institutions with assets over $500 billion mentioned the increasing sophistication of fraud as the most important challenge, implying that the issue is most pressing for FIs with greater resources. Needless to say, the volatility of fraud is an enigma across the board for both small and large institutions.  

With Silicon Valley Bank’s and Signature Bank’s downfall in March, fraudsters wasted no time stepping in. In the days following the banks’ collapses, third-party fraud as a percentage of attempted account openings increased from roughly 3% to more than 14%, according to a Socure analysis. While issuers brace themselves for stricter rules and regulations, navigating the existing regulatory landscape should remain top of mind, now more than ever, and lackluster fraud and dispute management processes can no longer take the back seat.

Employing technologies and automated processes that simplify and streamline complex practices like fraud and dispute management assures issuers remain regulatory compliant, despite the fraud landscape. Regulations E and Z may seem simple, but applying these requirements throughout your fraud and disputes process is complicated. Learn more about how Quavo’s Disputes as a Service™ offering assures compliance with existing regulations for your FI by contacting a Quavo Expert today.


Julia Lum Communications & Sponsorship

You may also like

Learn more about the most advanced fraud and dispute solution for financial institutions.