A bill introduced last week would allow banks to extend holds on suspicious checks and wire transfers in cases of potential fraud. .The Strengthening Transaction Oversight and Preventing Payments Fraud Act was introduced June 18 by Rep. Young Kim (R-Calif.). Currently, banks are required to make funds available within a given timeline, Kim noted, even if a transaction raises warning signs of fraud. Under the Federal Reserve’s Regulation CC, financial institutions can implement extended holds for up to seven business days if they have “reasonable cause” that the check is fraudulent or uncollectible. Extended check holds can also be placed for new accounts, those exceeding $6,725, consistently overdrawn accounts, or in emergency situations such as communications or computer outages. Wire transfers are usually processed within hours, making wire fraud challenging to reverse. A member of the House Financial Services Committee, Kim noted criminals stole more than $1.3 billion from consumers and financial institutions through check fraud in 2023 and 2024. Suspicious Activity Reports on check fraud filed with the Financial Crimes Enforcement Network nearly doubled from 2021-23. “Check fraud can wipe out a family’s savings overnight while leaving financial institutions responsible for covering the losses,” Kim said. “Our laws shouldn’t force banks to release funds before they have the opportunity to investigate suspicious transactions. The STOP Payments Fraud Act gives financial institutions the time they need to stop fraud before it happens and better protect Americans’ hard-earned money.”
