Federal Reserve Board Finalizes Rule Allowing Debit Fraud-Prevention Adjustments

Fraud Federal Reserve Debit Cards

On July 27, the Federal Reserve Board issued a final rule that amends Regulation II. The rule allows a debit issuer that is subject to the interchange fee standards to charge—in addition to interchange fees—a fraud-prevention fee to defray costs associated with implementing policies and procedures that reduce fraudulent electronic debit transactions. The fee cannot exceed one cent per transaction, unchanged from the Federal Reserve’s interim final rule on this issue. The final rule details fraud-prevention program requirements that an issuer must meet in order to charge the fee. An issuer charging such a fee must annually review and update its fraud-prevention program and notify its payment card networks that it complies with the rule’s fraud prevention standards. The rule takes effect October 1, 2012.