Federal Reserve Vice Chair for Supervision Michelle Bowman said Tuesday that consumer fraud and scams are becoming an increasing risk for the financial system, stressing that nearly every reported instance involves a bank account or a payment connected to one.
Bowman told attendees that regulators are looking at ways to bolster the response to consumer fraud even as banks themselves pour unprecedented resources into security systems and consumer education campaigns. She described the work of addressing fraud as one of the agency's most important responsibilities, even if that role is not always immediately visible.
Referencing data from a Fed survey, Bowman said one in five American adults reported experiencing financial fraud or scams in 2024. That figure framed her call for more coordinated action across public and private sectors to address payments-related abuse.
To advance that coordination, Bowman announced she will convene a roundtable with Treasury Secretary Scott Bessent and Federal Communications Commission Chairman Brendan Carr. The meeting will invite participants to outline the steps they are taking to fight payments fraud, describe effective informal practices for sharing data, highlight prevention measures that have worked, and identify what additional cross-sector or government efforts would be useful.
Bowman said the Federal Reserve is crafting a comprehensive strategy that will deploy the Fed's authorities to prevent payments fraud and to protect consumers, businesses and supervised institutions. As part of that effort, agencies are reviewing enhanced guidance and resources for banks, along with approaches to strengthen bank defenses and improve recovery for victims of fraud.
The Fed's work, as described by Bowman, targets multiple points in the payments chain where fraud occurs and seeks to combine supervisory action with information-sharing and guidance designed to reduce harm and support remediation for consumers and institutions affected by scams.
Key takeaways
- Consumer fraud and scams are viewed by the Fed as a growing systemic risk because most schemes involve bank accounts or payments.
- The Fed plans a cross-agency roundtable with the Treasury and the FCC to map current anti-fraud efforts and identify gaps in data sharing and prevention.
- Regulators are developing a comprehensive strategy and reviewing enhanced guidance and resources for banks to strengthen defenses and aid victim recovery.
Impacted sectors: banking, payments, consumer financial services.
Risks and uncertainties
- Rising consumer fraud poses a risk to the stability and integrity of the financial system - particularly for institutions that handle payments and retail deposits.
- Banks may face operational and reputational pressures as they expand security investments and victim-recovery efforts.
- Effective cross-sector and government coordination is uncertain and will depend on the outcomes of planned discussions and the development of new guidance.