Sharing Information is Key to Fighting Fraud

[BIRDS CHIRPING] How do you share critical fraud intelligence in a payments ecosystem that is faster, more interconnected, and more targeted than ever before? It starts with trust, and a clear understanding of what can and should be shared. Welcome to Payment Smartcast, Notch's podcast channel. I'm your host, Dan Roth, Senior Director of Communications at Notch. This episode is part of our 365 podcast series, sponsored by B&Y. Be sure to stay tuned for a message from them following this episode. Thousands of payments professionals will soon be gathering in San Diego from April 26th through April 29th, for smarter, faster payments 2026. As fraud threats evolved, the ability to securely share information across the ecosystem is becoming a defining factor in how organizations manage risk. Today, we're previewing an important session at this year's conference. Decentralize, not just connected, sharing fraud intelligence. Joining me are two experts who will be on the panel and who bring legal and payments perspectives to this critical issue. Matt Luzatter is a partner at the law firm of Kelly, Dry, and Warren, where he manages their Chicago office. Unchuck Ellert is the Associate Managing Director of ACH Network Development at Notch. Together, we'll explore what effective information sharing looks like in practice, how organizations can navigate legal considerations, and why collaboration is essential in today's payments environment. There is a lot to discuss, so let's get started. Well, Matt, first of all, thank you so much for joining us on Payments Markcast. We're really excited to have you, and I know I'm looking forward to the conversation. For our listeners, this is your first time joining the podcast. So before we really jump in, I hope you just take a moment and introduce yourself and talk to our listeners a little bit about your background. - Certainly, Dan, and thank you for having me here. Delighted to be here to talk about fraud and decentralized systems for dealing with it. My background, so I am a partner at the law firm of Kelly, Dry, and Warren, where I manage our Chicago office. I've been involved in the payments industry for about the past 20 years here, dealing with everything from original nation agreements to government investigations. So sort of seeing all aspects of it, and glad to be here with you and Shep to talk about some important topic today. - So to lay the groundwork from a legal perspective, what makes the payments ecosystem just different from other regulated industries? - I think there's two aspects to it. The first aspect is the number of players in the payments ecosystem compared to other regulated entities. I'm not selling securities or lending short, but oftentimes there's a limited number of players in those industries. But when you get into the payments industry, we have everyone from your originators and third party senders, perhaps nested third party senders, and all the way up to you, however you're receivers, we know in the ACH network. Of course, other payments networks have additional players and then different types of players, different titles there, but the number of players, I think, what makes this industry unique? That also presents some challenges when we're dealing with issues like fraud, right? Because there's a bunch of different folks that touch on the transaction that the consumer may interact with. And at each of those interactions, there's an opportunity there for bad guys for fraudsters to try to get in and intercept that payment. And I think that second part is the fact that we're always playing defense in this industry. I mean, we see fraud develop over time with different techniques, different scams, different technologies that are applied to it, like artificial intelligence right now and dealing with that. So I think that's what makes the payments industry unique from other regulated industries is players and we're always playing defense. Well, I'm glad you talked about the players in the payments industry because Natcha is a very important player in the payments industry. And I'm glad that we have Chuck here, who's part of the conversation. So Chuck, before we dive in and talk about your role at Natcha, I'm hoping that you can introduce yourself to our listeners and talk a little bit about your background and your journey to being at Natcha. - Sure thing, Dan. So, you know, I joined Natcha here about 11 months ago. Actually the payments, you know, conferences actually my anniversary practically of my time here at Natcha. Prior to Natcha, I had a couple different roles. I was at a very large telecom where I had a number of different roles always within payments, always within the payments world. And prior to that, I was at the Federal Reserve Bank of Cleveland and again, very involved in payments and actually payment processing. So I've had this like life that's been a journey of always with the payments, but I've had different aspects from government payments as a payment processor, as well as an extremely large merchant with over 140 million customers. So being in Natcha, now I just have a whole different perspective on things because I've seen payments in so many different facets. So before we dive in a little bit more to talk about smarter faster payments 2026 and the panel, talk to our listeners just a little bit about your role at Natcha and how that fits into your previous experience. - Ah, sure thing. At Natcha, I serve as the associate managing director of the ACH network development, but I'm also the product owner for FIXES. So in simple terms, my job is to make sure the ACH network and the solutions that support it like FIXES continue to evolve in ways that meet what financial institutions, FIN-TEX, and end users need as payments get faster and more interconnected. A lot of my day to day is about bringing stakeholders together and figuring out where the network needs to go next. That could be around risk, new capabilities, new use cases or in today's context, how we can collectively get smarter about fraud without creating frictions that slow down innovation. And that's also one of the reasons I'm really excited about having this conversation with Matt. Collaboration is becoming a requirement, not a nice to have, and payments are more interconnected than ever. So it's important for us to all understand what's happening across the ecosystem and not really just within our own four walls. - So Chuck, I'm glad you brought up smarter, faster payments because you and Matt are both going to be on the panel decentralized, not disconnected, sharing fraud intelligence. So this is an opportunity to give our listeners just a little bit of a preview of what this discussion is going to entail. So Matt, I'm curious from your perspective, why is information sharing so critical in today's faster payment environment? - That's a great question. And I think it starts with the fact that none of us are in this alone, right? We all have the same interest at heart, which is protecting the financial system and protecting our consumers here. And with fraudsters being extremely adaptive and fraud moving extremely fast right now, it is even more important than before for the players to be connected and to be on the same page, sharing information about what they're seeing come across, their networks are with their customers. So others can be prepared to address those same challenges that similar to what Chuck had said before, is we're beyond our own four walls right now. This is all interconnected and we're not doing anyone any favors if we're not sharing the information that we've gained through our experience. Even if it's a bad experience and something happened, we should be able to share, look, here's what occurred. Here's some possible ways that this could have been mitigated. Here's some new typology that we just saw a few days ago, be prepared this could hit you first. I mean, if anything, fraudsters are opportunistic and they're gonna reuse the same stuff that's worked on somebody before. So we've got to work together to stop them there. - And Chuck, from your perspective, both from someone who's worked a wealth of experience before coming to Natcha and now at Natcha, why is information sharing from your point of view, point of view so important in today's ever growing and ever faster payment environment? - Yeah, I kind of want to build on a little bit of what Matt was saying. I really like the aspect of, yeah, we're all in it. We all want to protect our customers. We also want to protect the financial systems and it goes beyond our four walls. And the fraudsters move fast. And so fraud doesn't stay in one place and it's moving really quickly, laterally, through the ecosystem. The bad actors, Probe, whichever institution has the weakest friction, the latest friction point. And if you're only seeing fraud attempts at your institution, you're probably behind. And with faster payments, the window to act gets increasingly smaller. And so if intelligence isn't shared quickly in a digestible way, businesses are going to lose the chance to intervene and protect their customers. And going back to what Matt said, we have to protect it. So the more we shrink the time between when someone sees that fraud signal and everyone else can become aware of it, the stronger the entire network becomes. And what I think that I would kind of like to add in terms of a pitch, frankly, for smarter, faster payments and going to a session like this is to build your connections. I mean, you're going to have the ACH contact registry, right? And you're going to have a name and you're going to have a phone number. But there is nothing more valuable than introducing yourself to the folks around you that are attending the session at Natcha or other sessions at Natcha and building up your role adec, so to speak, of folks that you can call when something does go wrong. So you immediately have a human connection that you can pick up the phone and you can say, this is what's happening. I'm not sharing any of what we can talk about here, like sharing, you know, PFI, personal financial information, but hey, here's what's going on. How have you dealt with how are you seeing this? And, you know, maybe you will be seeing this. So build your network here at smarter, faster payments and you know, turn to the person next to you and introduce yourself. Oh my gosh, yeah. So agree on that, Matt. I mean, I, you know, I met you years ago and boy, I picked up that phone before. And I, it's been really, it's been great to have that type of connection. Well, Matt, and I'm glad you talked about building your network and I think people, they're trying to judge their network, but they also want to know what are the legal, what is, what is allowed and what is not allowed. So I'm hoping we can talk just a little bit about legal misconceptions that keep organizations from sharing fraud-related information. And so I'm hoping you could just break it down to green light, yellow light, red light when it comes to information that you can share after you've made that connection at smarter, faster payments at your session. Sure. Well, I, I will say that some of the misconceptions are around, you know, privacy, confidential business information. That's where it's important to know sort of what, what, what can you and can you share. And, and there's going to be, your company's going to have some policies around that that can give you, give you some guidance on it. Then in doubt, you can ask your legal counsel on it, but as a general matter, you can talk about sort of general fraud typologies that you're seeing in the market in general. You can share some of the knowledge that you've built up on that. Now obviously, red light would be, don't say, you know, I've got, check out Ellers account with a balance of, you know, $2 million, suffered a loss to, you know, a fraudster who opened account at this bank, this account number. No, that's not the type of information you're sharing. There are, you know, that'd be that red light type of information. There's also some, some maybe misconceptions around antitrust violations where you can share about like, you know, boycotting certain, certain companies saying we're not going to do business with them. That's kind of a no go, you know, red light area that you might want to stay away from. Again, this isn't legal advice here. You saw your legal counsel about what you can and can't share in that context. But you certainly want to be very careful about sharing some of your, you know, the yellow light stuff would be your internal sauce on how you're really addressing stuff in the nuts and bolts level. But you know, what's open for the green light is, is again, sort of what you're seeing on trends stuff that's reported in the IC3 report. I mean, we read the news every day and can relate to it and talk about sort of ideas on how we would address that fraud that's making the headlines. And Chuck, Matt has laid out from a legal framework what you can and cannot share. But obviously you're approaching this from the not to point of view. So I'm hoping you can talk to our listeners. How does the ACH network and not to currently support information sharing among its participants? We already have several touch points in place that help ACH participants stay informed and coordinated around risk. One is the overall governance and rules environment. The not to operating rules give everyone a consistent framework for understanding their responsibilities, warranties and behaviors across the ecosystem. And I think that's one thing that makes the ACH network so resilient and strong. Yeah, this consistency is a form of information sharing by itself. But then there's also our risk oriented collaboration work. So this includes tools and forums as Matt said earlier, the smarter payments conference, where people and institutions can elevate trends, ask questions, you can compare notes and learn from experts. That's not, nothing's perfect, but it's a foundation for what the industry can build upon. And I think it gives you some questions you can take back to your own organizations to ask, right? I mean, we've done, speaking of sort of that theme of the red, yellow, green, red, what is a letter of indemnity? What you shouldn't be saying in that letter of indemnity. There's been a few sessions over the years on that, but that tees up those questions in your mind of like, oh, maybe I need to go back and I need to ask some questions about letter of indemnity. Or like, do we have a 314B program, which for those maybe not familiar with it, that allows with notification, defense and financial institutions to share information with each other? How do you use that program? And I think we're going to end up touching on some of that in this session that Chuck and I are doing at SmarterFaster Payments, because we're going to talk about some of the limitations to like a 314B program, namely that it is domestic. And as we know, fraud is not domestic in terms of sharing information and some of the other limitations around there. And then we're going to get into and start talking about some of the technology that can possibly solve some of the problems that we've got today with this collaborative approach to disrupting fraud using like decentralized trust frameworks. So I'm glad that you brought up that this session is really going to be about connections. You're going to learn about the connections that you can have both formalized through Natcha, the informal connections that you're hoping to drive between the attendees. After the session is wrapped up, what kind of conversations are you hoping that this sparks among the people who are in the room? And I'm going to start with you, Matt. I hope that the conversations that are going to come out of this are like, how can we leverage some of the technology that's evolving out there? I mean, right now we've got some companies that are doing some pretty innovative things. With these decentralized networks, that information can be anonymized and put into and then later mind for trends for possible things that you can be used to mitigate fraud. And done in a way that is conscious of the legal restrictions that exist, you know, whether it's on privacy or antitrust or something, but navigates those risks and allows folks to share stuff in a very collaborative way that's fast. I mean, that's the main thing that I think that's come out here today is our reaction to frauds got to be faster. Criminals are moving faster, payments are moving faster. We need to be able to move faster. And some of our systems that we have today, they're just too slow. To keep up with this in order for us to put on a unified defense against the fraudsters. In addition to what Matt said, you know, I hope people walk away saying not okay, what do we need to do? But to say, hey, we can do this. We just need the right framework rules and governance. So I'd really like to see institutions asking how they can participate in a pilot. There's some early stage collaboration models out there that one that we're going to cover during the session that was done by JP Morgan, Conexis. And also, but I also think vendors need to think about how their products can support safe information exchange. But this will hopefully, you know, because we'll actually have two attorneys on the panel, one from FinTech and one from private practice. We're going to have hopefully give legal and compliance teams, give them some confidence around what are the, what's allowable and what's not. that red light, green light, yellow light type information. And then lastly, people recognizing that decentralization isn't about loosening controls. And if we can share information in a smart federated way, then we can strengthen our network. And going back to the first point early of the day, what's us about at the end of the day? It's about protecting our customers for protecting our users of the payment system and also to reduce fraud. Well, this has been a great discussion because we've talked about both your panel. You've touched on some important legal points of view. You've talked about the role that not to play. I think to wrap up by question is for our listeners, who may be wavering and thinking about, well, maybe I can get this online. Maybe I can tune into maybe there be some educational materials. Why is it important that you're in the room? Be that at the session or in the conference center at smarter, faster payments when it actually comes to this collaboration and this connection. So I'll start with you, Matt. I mean, I would start off by saying, first of all, there is no substitution for face-to-face meetings. And the great thing about smarter, faster payments is you're just not meeting somebody once. You're seeing them throughout the conference. You're running into them. You're continuing on your conversation that maybe you had before, but you needed to go to the next session. You're joining them at their lunch table. You're really building those authentic connections with folks. And I think the other great advantage that comes out of the sessions themselves is that ability to ask questions? Like, stand up. Raise your hand. There is a reason why these sessions have 10 minutes built into the end, or they're letting you ask questions throughout. It's because they want this to be interactive, right? Just like the whole theme of this session is we need to have our fighting against fraud be more interactive. These sessions are interactive. So ask those questions, participate in them. And that's something that you can't do if you're just doing it online or just reading the materials here. So engage is what I would say. It's the greatest thing that you can get out of attending in person smarter, faster payments. Bad. I mean, I'll echo that because, you know, it's-- and it's also that this conversation, you know, this conversation will build on the next session and the next session. And you'll be able to synchronize across your team. And if you have multiple team members coming to the conference, then you can compare notes across multiple sessions to really leverage that knowledge and act as a strain. When I was at the Fed, we would actually divvy up our sessions and tracks to make sure that we were able to coordinate across and have that dialogue. But I got to tell you that having that ability to raise your hand in the session, you know, to ask and get any clarifying questions and making it interactive is really powerful. And, you know, it has become the basis of so many of the relationships that I've built across the industry is just raising your hand and asking a question because, you know, you're asking questions of the experts in their fields. And, you know, and there is no stupid question. And they just are all part of, like, learning payments and really understanding this complex ecosystem that we live in. And to build off of that real quickly, the speakers of panels will often hang around after this session, too. So, for those of you that may be a little shy about asking a question in front of a room of 60 people, there's nothing that I like more as a panelist or a moderator of a session to have that line of attendees. You're there to ask, you know, some, you know, some pretty detailed questions sometimes. A very good question. It gives me, inside as a practitioner, to hear from what the audience took away and what their questions are. So, yeah, Chuck, I mean, to your point, it's, you know, when you guys spread out and you're attending all those different sessions, you're building sort of the organizations network as well. And that can lead to those introductions, too, to say, "Hey, I may not work in this area of compliance. I got a buddy that works in this area." Or a coworker that works in this area of compliance. Let me introduce you to somebody that I met at this, at this session. And that's how our network gets built. 'Cause it's not just one-on-one, it's one to many on our organizations. - So, thank you again to Matt and Chuck for breaking down the realities and opportunities of sharing fraud intelligence in today's payments ecosystem. Effective communication and collaboration is foundational. This includes clear legal understanding, knowing capabilities, and even meeting the person sitting next to you at a conference. These are exactly the types of conversations that will take center stage at smarter, faster payments 2026. Attempties will walk away with practical strategies, clearer guidance, and new perspective on how to strengthen fraud defenses through cooperation, and maybe a new connection with the person sitting next to them. You will want to make sure you are part of the conversation. To register, visit payments.naca.org. And thank you for listening to Payment Smartcast and to BNY for sponsoring the 365 podcast series. Keep listening for a message from them following this episode. And for our listeners, be sure to subscribe so you never miss an episode featuring the voices shaping the future of payments. And we'll see you in San Diego at smarter, faster payments 2026. - Unlock the future of payments with the NY Global Payments and Trade, proud sponsor of Natchez 365 podcast series. Together we're driving innovation in digital payments, enhancing security, and simplifying global trade. Stay ahead and a rapidly evolving landscape with insights from industry leaders and cutting edge solutions designed to accelerate your business. Discover how BNY's expertise empowers smarter, faster, and safer payments worldwide. Visit bny.com/natcha to learn more.