Building Momentum: Progress on Reg CC, the UCC, and the Fight Against Check Fraud

A couple years ago, I wrote that check fraud was emerging as a leading concern for community banks, that combating it would require shared responsibility across the financial ecosystem, and that ICBA was just kicking off a community bank check fraud task force to help lead the way.

Real progress on check fraud has never come from a single breakthrough. It comes from sustained advocacy, patient relationship building, and the slow accumulation of small wins. Community banks are in the middle of that arc, and the work is paying off.

Where we’ve gotten traction

A few headline-grabbing victories stand out. Federal policymakers are aligned on the urgency of check fraud in a way they were not before. The federal government is moving away from paper Treasury checks. A joint committee of the American Law Institute and the Uniform Law Commission is on a fast track to study how the UCC allocates check fraud losses across financial institutions. Federal banking regulators are actively considering changes to mitigate payments fraud. Each of these reflects years of community banker input.

ICBA has been at the table for all of it. When the Treasury Department convened the Financial Literacy and Education Commission to focus federal agencies on payment fraud, ICBA was the only non-governmental presenter. When the Permanent Editorial Board of the UCC held a national stakeholders’ meeting, ICBA brought community bankers into the room.

When the CFPB opened a petition to shorten Regulation CC hold times, ICBA was the only banking trade association to file a comment in response. We argued for the opposite: longer hold flexibility for higher-risk situations like mobile deposits, new accounts, and unusual activity patterns. The check-clearing window is the operational space in which a careful banker catches a fraudulent item before it becomes a loss.

When the federal banking agencies issued their joint request for information on payments fraud, ICBA delivered a detailed comment letter calling for a clearer Reg CC safe harbor, standardized interbank dispute resolution, and practical Federal Reserve operator tools. Our state affiliates co-signed a second letter. Community bankers filed individual submissions in volume.

When the Federal Reserve later sought input on the future of its check services, ICBA filed a comment urging the Fed to keep those services in place. Community bankers responded as well. The Reserve Banks’ operator tools and the hold flexibility Reg CC permits are central to how community banks detect and stop fraud.

On Capitol Hill, ICBA has kept community bank voices at the center of the conversation. A community banker on our Fraud and Scams Task Force testified before a House Financial Services subcommittee, and we have submitted statements for the record at multiple House and Senate hearings. We are also engaging Congress on legislation across the broader fraud and scams picture, including updates to the Expedited Funds Availability Act.

But equally important have been the quieter wins. Stronger working relationships with regulators. A growing partnership with the U.S. Postal Inspection Service, and an open dialogue with the U.S. Postal Service. Practical fraud prevention resources developed by community bankers for community bankers, including a guide for how to escalate concerns to regulators. The Fraud and Scams Task Force I described kicking off a couple of years ago has matured into a real venue for peer intelligence and best-practice sharing.

Across ICBA

The policy work doesn’t happen in isolation. Other parts of the association are pulling in the same direction:

• ICBA Innovation continues to bring check-fraud-focused fintechs to community banks through the ThinkTECH Accelerator and Solutions Forums.

• ICBA Education has built out its fraud curriculum, including a multi-day Fraud Seminar featuring Secret Service agents and postal inspectors.

• Independent Banker covers check fraud across nearly every issue and runs a recurring fraud column.

• The fraud channel on ICBA Community, now well over 1,000 members strong, keeps peer intelligence flowing every day.

What’s next

There is more work to do. The UCC joint committee will move quickly, and community banks need a sustained presence in that drafting process. The agencies are working through responses to the payments fraud RFI. The legislation before Congress will need community banker advocacy to move forward.

If you haven’t engaged yet, the Fraud and Scams Task Force and the fraud channel on ICBA Community are easy entry points. Send us your loss data. Share your case experiences. When you meet with policymakers, bring the stories. That’s the raw material that makes the next round of wins possible.

You can always view the latest on our work and download resources from our newly redesigned fraud and scams website. Please reach out to us any time at checkfraud@icba.org.

Scott Anchin is ICBA senior vice president of strategic initiatives and policy.