The Federal Reserve Board on July 27 approved a final rule that amends the provisions in its debit-pricing rule that permit debit card issuers subject to the interchange fee standards under the Durbin amendment to Dodd-Fank to receive a fraud-prevention adjustment.
The final rule revises provisions now in effect as an interim final rule by simplifying the elements required to be included in an issuer's fraud-prevention policies and procedures. To receive an adjustment, issuers must review their fraud-prevention policies and procedures, and their implementation, at least annually. They also must update their policies and procedures as necessary based on their effectiveness and cost-effectiveness and, as already required, as the types of fraud and available methods of fraud-prevention change.
Under the final rule, issuers are eligible for an adjustment of no more than 1 cent per transaction¬–the same amount as in the interim final rule–if they develop and implements policies and procedures designed to reduce the occurrence and costs of fraudulent debit card transactions.
The final rule retains and clarifies the requirement that an issuer that meets these standards and wishes to receive the adjustment must annually notify the payment card networks in which it participates of its eligibility to receive the adjustment.
In addition, the final rule prohibits issuers from receiving or charging a fraud-prevention adjustment if they are substantially noncompliant with the Fed’s fraud-prevention standards and describe steps they must take once they become substantially noncompliant to become eligible to receive the fraud-prevention adjustment.
The amendments take effective Oct.1.