June 18, 2020

Federal Reserve announces FraudClassifier Model to help organizations classify fraud involving payments

For release at 1:00 p.m. EDT

The Federal Reserve today published the FraudClassifier model—a set of tools and materials to help provide a consistent way to classify and better understand the magnitude of fraudulent activity and how it occurs across the payments industry. The model was developed by the Fraud Definitions Work Group, which was comprised of Federal Reserve and payments industry fraud experts.

"The FraudClassifier model can help address the industrywide challenge of inconsistent classifications for fraud involving ACH, wire, or check payments," said Jim Cunha, secure payments strategy leader and senior vice president at the Federal Reserve Bank of Boston. "The FraudClassifier model enables payments stakeholders to classify fraud in a simple and similar manner. It can be applied across an organization to help ensure greater internal consistency in fraud classification, more robust information and better fraud tracking."

The key advantage of the FraudClassifier model is the ability for organizations to use it to classify fraud independently of payment type, payment channel or other payment characteristics. The model presents a series of questions, beginning with who initiated the payment to differentiate payments initiated by authorized or unauthorized parties. Each of the classifications is supported by definitions that allow for consistent application of the FraudClassifier model across the industry.

The Fraud Definitions Work Group also developed and recommended an industry adoption roadmap, which outlines a strategy and potential steps to encourage voluntary industrywide use of the FraudClassifier model.

Learn more—and sign up to access educational resources and support tools for the FraudClassifier model—by visiting FedPaymentsImprovement.org.

About the Federal Reserve and Payments
As the U.S. central bank, the Federal Reserve System provides payment services and seeks to foster the stability, integrity and efficiency of the nation's monetary, financial and payment systems. In 2013, the Federal Reserve initiated a broadly collaborative effort to enhance the end-to-end speed, security and efficiency of payments in the United States. As an outcome of that collaboration, the Federal Reserve is committed to pursuit of five desired outcomes outlined in the 2015 Strategies for Improving the U.S. Payment System (PDF) paper: speed, security, efficiency, international payments and collaboration.

Media Contacts:
Federal Reserve Bank of Chicago
Cindy Ivanac-Lillig
Federal Reserve System
Maryellen Thielen
[email protected]
Federal Reserve Board
Susan Stawick
Last Update: June 18, 2020