Pointing out that losses to wire transfer fraud continue to mount, U.S. Rep Brad Sherman (D-Calif.) asked the chair of the Board of Governors of the Federal Reserve System why the U.S. doesn’t institute payee matching requirements for banks.
Fed Chair Jerome Powell was testifying Feb. 11 before the House Financial Services Committee about monetary policy and the economy. Sherman took the opportunity to once again press the issue of requiring payee matching when sending wires. FBI data show that in 2018, 11,300 victims in the United States lost nearly $150 million because of wire transfer fraud—a 166% increase in the total money lost compared with 2017. This is just the tip of the iceberg as the FBI estimates that only 12-15 percent of all wire fraud is reported.
During the hearing, Sherman pointed out that the United Kingdom has already gone to a payee confirmation system. The UK’s system, which goes into effect March 31, requires banks to check that the account name entered by a payer matches the account paid. Banks are to alert customers if there is a discrepancy.
“I know you’ve raised issues of state law,” Sherman said during the hearing. “I’ve analyzed it and I don’t see what would prevent the Fed from prescribing what the wire transfer system would be.”
Powell did not get to respond but he has previously said there are difficulties instituting a payee matching system like the UK version in the United States. According to Powell, a payee match requirement would conflict with the uniform commercial code that provides the governing law for wire transfers.
According to Sherman, the International Standards Organization, which is an international standard-setting body composed of representatives from various national standards organizations, has prescribed changes that would require identification of the payee.
Sherman raised the same question during a hearing in 2018. In addition, ALTA Past President Dan Mennenoh ITP, NTP offered the same solution about payee matching requirements during a Congressional hearing on data security in 2017.
ALTA launched the Coalition to Stop Real Estate Wire Fraud in 2019 to raise awareness and educate consumers about the dangers of wire fraud. Through online digital campaigns, the coalition has garnered more than 22 million ad impressions to potential homebuyers in nine markets.
In addition, ALTA has developed several resources to help title professionals protect money during a real estate transaction including:
ALTA Outgoing Wire Preparation Checklist: Use this checklist as a best practice for verifying outgoing wire information.
ALTA Rapid Response Plan for Wire Fraud Incidents: The standard ALTA Rapid Response Plan for Wire Fraud Incidents has been developed by the ALTA Information Security Committee.
Wire Fraud Video: This 1-minute video provides tips for homebuyers to protect their money. Link to this video from your website, include in your email or share on social media.
Wire Fraud Infographic: ALTA has produced this Rack Card explaining Wire Fraud. ALTA Members can brand the infographic with their own information.
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