Fighting Scammers with Flexible Instant Payment Choices

Giving customers more flexibility in instant payment systems could give users more control over their transactions and help fight scammers. An option to delay payments could introduce the needed friction to stop fraudulent payments, said Eva Velasquez, CEO at the Identity Theft Resource Center and Ken Palla, retired director, MUFG Bank.

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“Do all my payments have to be super fast? Absolutely not. For many, four hours is just fine, or overnight is also fine. I am just giving my daughter some rent money and she does not need it 15 seconds from now,” Palla said in this panel discussion with Information Security Media Group. The option of a delayed payment would give consumers more time to verify the transaction and the recipient, he said.

The ITRC, which provides services to thousands of victims of scammers and identity thieves, has been promoting the idea of giving consumers more choices, “but I can’t get people in the banks to listen to that,” Velasquez said. “It’s all about the marketing people driving the speed. And again, as I said before, the marketing people aren’t the ones reimbursing the customers, but they’re driving how the product is defined.”

Part of the problem is the average consumer doesn’t truly understand how instant payments work. “They know it’s being transferred, but they don’t understand that it’s just like cash. They still think there’s some recourse like with stop payments on checks, but there isn’t. We need to introduce some friction to help protect these vulnerable populations.”

In this video interview with Information Security Media Group, Velasquez and Palla also discussed:

• The benefits and risks of instant payments;
• The need for consumer choice in payment speed;
• Strategies to help banks scams related to instant payments.

Velasquez, president and CEO at the Identity Theft Resource Center, previously served as vice president of operations for the San Diego Better Business Bureau and spent 21 years at the San Diego District Attorney’s Office. She is a recipient of the National Crime Victim Service Award from the U.S. Department of Justice and the Office for Victims of Crime and the Florence Kelley Consumer Leadership Award from the National Consumers League.

Palla helped shape the initial responses to the U.S. 2005 and 2011 FFIEC Regulatory Guidance to improve online security for U.S. banks and served as an adviser to the RSA Conference eFraud Global Forum. He currently serves as a member of the program committee for the annual RSA Conference in San Francisco.