WASHINGTON — The U.S. Faster Payments Council said it has released a new report outlining principles for resolving fraud disputes tied to instant payments, as financial institutions and payment providers grapple with rising fraud risks tied to real-time transactions.
The report, titled “Instant Payments Fraud Dispute Resolution: Guidance Principles for the U.S..,” was developed by the council’s Fraud and Scam Mitigation for Faster Payments Work Group and is intended to provide guidance for dispute resolution frameworks involving fraud and scams connected to instant account-to-account payments, according to the Faster Payments Council.
The organization said the report comes as instant payments continue to gain adoption in the United States, creating new challenges tied to fraud resolution in payment systems where transactions are typically irrevocable.
What’s Addressed in Report
According to the Faster Payments Council, the report addresses disputes involving unauthorized fraud, authorized push-payment scams, first-party fraud and request-for-payment fraud. Rather than establishing formal rules or liability standards, the report offers what the organization described as a flexible set of guiding principles that payment ecosystem participants can adapt based on their business models and operational capabilities.
“Speed and dispute resolution can co-exist. Establishing a clear and consistent dispute resolution process is essential to the adoption and growth of instant payments,” Lee Kyriacou, partner at PayGility Advisors and chair of the work group, said in a statement released by the Faster Payments Council.
Kyriacou said the report draws on lessons learned from existing payment systems and outlines “clear and actionable principles” for dispute resolution processes.
11 Guiding Principles
The report identifies 11 guiding principles, including shared responsibility among ecosystem participants for fraud mitigation, structured dispute resolution workflows, protections for vulnerable consumers and small businesses, and greater transparency through information-sharing standards aligned with ISO 20022 messaging frameworks, according to the Faster Payments Council.
Among the recommendations are standardized messaging capabilities, risk-based fraud mitigation tools, clearly defined responsibilities for sending and receiving financial institutions and streamlined dispute processes designed to preserve the speed of instant payments while addressing fraud concerns.
“Because many forms of instant payments are irrevocable, dispute resolution has become a defining trust issue for adoption,” Shelley Rojano, executive director of payments risk management at JPMorgan Chase and vice chair of the work group, said in the statement.
Various Approaches Examined
The Faster Payments Council said the report also examines approaches used in other payment systems, including the United Kingdom’s authorized push-payment scam reimbursement efforts, Brazil’s Pix instant payments system, Nacha’s planned credit-push enhancements and fraud dispute practices used by card networks and other payment platforms.
“The FPC continues to bring together diverse industry stakeholders to address some of the most important issues impacting faster payments adoption,” Reed Luhtanen, the Faster Payments Council’s executive director and CEO, said in the statement.
