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10/14/2020

FraudClassifierSM Model:

Better Fraud Data. Better Defense.

FRB Payments




In June, the Federal Reserve released the FraudClassifierSM model. This voluntary fraud classification model seeks to enable payments stakeholders to classify fraud involving payments in a simple and similar manner.

Fraud Classifier


“Inconsistent classification of fraud involving payments limits the ability to compare fraud information and understand the extent of fraud across the industry,” explained Mike Timoney, vice president, Federal Reserve Bank of Boston. “By providing an intuitive approach to classifying fraud, this model offers a holistic picture to help organizations better understand the magnitude of fraud involving payments.”
Developed by the Fed-led Fraud Definitions Work Group, this model helps to classify fraud involving payments by asking three questions:
  • The first question is “Who initiated the payment?” and focuses on whether the payment was initiated by an authorized or an unauthorized party.
  • The second question examines how the fraud was conducted.
  • The final question focuses on the specific tactic(s) and approach(es) used to carry out the fraud.

The key advantage of the FraudClassifier model is the ability it provides to classify fraud independently of payment type, payment channel or other payment characteristics.

Each of the model’s classifications is supported by definitions that clearly describe the intent of a given classification option. The classifications provide information about what type of fraud occurred and how it was perpetrated. Adding payment attributes (such as payment amount, date, type and channel) to these classifications can provide additional insights to aid an organization in identifying fraud trends.

To learn more about the model and the projected benefits of voluntary adoption, visit the FedPayments Improvement website and check out an interactive FraudClassifier model tool to explore the different classification paths.

Be sure to register to access the full model with supporting definitions and additional resources as a member of the Federal Reserve’s FedPayments Improvement Community.

Download The Fraud Classifier Visual

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