Reg II NFRM Press Release

Printer Version - Board of Governors of the Federal Reserve System

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Press Release

Release Date: July 27, 2012
For immediate release
The Federal Reserve Board on Friday announced the approval of a final rule that amends the
provisions in Regulation II (Debit Card Interchange Fees and Routing) that permit a debit card
issuer subject to the interchange fee standards to receive a fraud-prevention adjustment. The final
rule revises provisions that are currently in effect as an interim final rule.
Under the final rule, an issuer will be eligible for an adjustment of no more than 1 cent per
transaction--the same amount as in the interim final rule--if it develops and implements policies and
procedures that are designed to reduce the occurrence and costs of fraudulent debit card
transactions. The final rule makes changes simplifying the elements required to be included in an
issuer's fraud-prevention policies and procedures. To receive an adjustment, an issuer will be
required to review its fraud-prevention policies and procedures, and their implementation, at least
annually. An issuer also will be required to update its policies and procedures as necessary in light
of their effectiveness and cost-effectiveness and, as currently required, in light of changes in the
types of fraud and available methods of fraud-prevention.
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 explicitly prohibits
an issuer from receiving or charging a fraud-prevention adjustment if the issuer is substantially
noncompliant with the Board's fraud-prevention standards and describes steps an issuer must take
once it becomes substantially noncompliant to become eligible to receive the fraud-prevention
adjustment in the future.
The amendments are effective on October 1, 2012.
For media inquiries, call 202-452-2955
Attachment (187 KB PDF)

http://www.federalreserve.gov/newsevents/press/bcreg/20120727a.htm

8/3/2012