As announced earlier today, the Federal Reserve will begin work this month on a new study that will measure fraud and associated costs in the U.S. payments system and identify the causes and contributing factors to fraud. The study is part of the Federal Reserve’s ongoing effort to improve and support payment security throughout the industry, as outlined in the Federal Reserve Next Steps in the Payment Improvement Journey paper released last year.
The Boston Consulting Group (BCG), a global management consulting firm, will conduct the study, which is expected to be completed in four to six months. The study will systematically and objectively measure payment fraud and identify and provide insight on payment security vulnerabilities. The Federal Reserve expects the results of the study will help inform its ongoing collaboration with the industry to enhance end-to-end payment security. For more information, read the press release in its entirety.
“The vast number of participants and complex nature of the payments industry make it challenging to determine where the greatest opportunities exist for significantly mitigating fraud,” said Ken Montgomery, the Federal Reserve’s payments security strategy leader and chief operating officer of the Federal Reserve Bank of Boston. “We hope to bring greater insight to the challenge with a comprehensive view of payment fraud data and payment security vulnerabilities that will help inform next steps for ongoing industry collaboration.”
BCG was chosen through a competitive bidding process that considered a number of factors including, expertise, ability to conduct an independent assessment and proposed assessment approach.
Stay tuned! The Federal Reserve expects to initiate new collaborative industry work groups to analyze payment fraud and security vulnerabilities, assess potential approaches to mitigate them, and identify misalignment of incentives that may hinder progress.