FRAUDFORWARD
Before, During, After: Payments Fraud Prevention Across the Lifecycle with Kyle Caldwell
46 min
What’s up fraud fighters, and welcome to Fraud Forward!
This episode is one every fraud, risk, payments, and operations leader needs to hear.
We talk about fraud all the time, but we do not always talk about where in the payment lifecycle things actually break. Is it onboarding? Authentication? Speed? Recovery? Or is it our misunderstanding of what payment controls actually do?
In this conversation, I sit down with Kyle Caldwell, Head of Fraud Prevention at The Clearing House, to walk through payments fraud prevention the way it actually happens:
- Before a payment is initiated
- During the moment of initiation
- After funds move
Because once the money moves, the rules change.
And that is the big takeaway here. Payments fraud prevention is not just a rail problem. It is a lifecycle problem.
Kyle brings a grounded, strategic view of payments fraud prevention and helps reset the room on one of the biggest misconceptions in our space. Faster payments do not automatically mean faster fraud. In many cases, what shows up at the rail is simply the final step in a much longer fraud chain.
For community banking fraud prevention teams, credit union fraud prevention leaders, and anyone building fraud operations strategy around real time payments, this episode is packed with practical insight.
What you’ll hear in this episode
- Why payments fraud prevention has to start before the payment rail
- Where institutions confuse rail risk with customer compromise
- How RTP fraud prevention differs from ACH fraud recovery and wire fraud recovery
- What controls exist within real time payments that many institutions do not fully understand
- How indemnity and recovery processes work in the RTP environment
- Why real time decisioning matters more than after the fact investigation
- Where financial institutions are over investing in detection and under investing in prevention
- Why collaboration between institutions is still one of the strongest fraud controls we have
- What fraud leaders should prioritize in 2026 as payment lifecycle fraud evolves
You should listen to this episode if you
- Lead fraud, risk, payments, or operations at a bank or credit union
- Are evaluating RTP fraud prevention or instant payments fraud controls
- Want a stronger framework for payments fraud prevention before payment initiation
- Need to improve post payment fraud recovery expectations internally
- Are building a more mature fraud operations strategy for real time payments
- Want practical insight from someone working directly inside The Clearing House fraud prevention ecosystem
If you liked this episode, be sure to subscribe and review the podcast on iTunes, Spotify, YouTube, or wherever you listen to podcasts. It really helps with getting the word out.
Episode notes & key takeaways
Before we double click on the notes, I just want to say that my marketing team told me I need to structure these notes a certain way in order for people to find my podcast. The below is a bit of that 😀
Before the payment: Where payments fraud prevention really begins
Let’s get into it.
One of the strongest points Kyle made is that fraud rarely starts at the payment rail.
By the time a suspicious payment hits RTP, ACH, or a wire channel, the real breakdown has often already happened upstream.
That breakdown may include:
- Weak account opening controls
- Gaps in KYC or identity verification
- Customer compromise
- Account takeover
- Social engineering
- Money mule account activity
- Weak authentication flows
- IVR or customer service information leaks
That matters because too many institutions still talk about rail based fraud like the rail itself is the root cause.
Kyle makes it clear that in many cases, the payment is simply the final move in a much longer fraud story.
For teams working in community banking fraud prevention and credit union fraud prevention, that means prevention metrics should not start with the transaction alone.
They should also include:
- Quality of onboarding controls
- Authentication performance
- Mule account detection
- Customer education effectiveness
- Signals of compromise before payment intent is formed
If fraud shows up at the payment rail, you are already late.
During the payment: What RTP controls actually do
This is where fear tends to show up.
A lot of institutions still carry the mindset that faster payments equal faster fraud. Kyle pushes back on that in a really important way.
His point is simple:
Speed does not create fraud. Weak identity and poor controls do.
He explains that RTP is a credit push model. That means:
- The sender authorizes the payment
- Funds must be available before movement
- Settlement is final
- The design reduces some traditional third party debit risk
That does not eliminate fraud. It changes where the risk sits.
In an RTP environment, institutions should be thinking hard about:
- Authorized push payment scams
- Customer compromise fraud
- Social engineering
- Account takeover prevention
- Pre transaction risk scoring
- Real time decisioning fraud workflows
Kyle also breaks down something many teams may not fully understand, which is the use of indemnity in the RTP recovery process.
That matters because if institutions do not understand the controls built into the rails they use, they are fighting blind.
After the payment: Recovery is cooperative, not guaranteed
Okay, now let’s reset the room for a moment.
Once money moves, recovery becomes harder, more uncertain, and much more dependent on relationships, response speed, and process maturity.
Kyle talks candidly about the recovery reality across different rails:
- Wire recovery can depend on manual outreach and whether another institution responds
- ACH fraud recovery is heavily tied to return windows and timing
- RTP recovery introduces a more structured message based process, but it still depends on action and coordination
That is why recovery cannot be the strategy.
Prevention has to be the strategy.
Some of the post loss mistakes Kyle called out are especially important:
- Not using indemnity processes correctly
- Letting process delays slow down urgent response
- Failing to prioritize active, fast moving fraud cases
- Applying legacy playbooks to instant payment environments
- Measuring only dollar value instead of ongoing fraud velocity
That last point is huge. A low dollar recurring fraud pattern can still be operationally devastating if it scales.
Collaboration is still one of the strongest controls in payments fraud prevention
100 percent.
One of my favorite parts of this conversation is the reminder that fraud does not happen in silos, and neither should our solutions.
Kyle reinforces something fraud fighters know deep in their bones:
- Recovery improves when institutions communicate
- Prevention improves when networks share intelligence
- Fraud teams move faster when they are not isolated by process, department, or rail specific thinking
For financial institutions trying to modernize payments fraud prevention, collaboration is not optional. It is infrastructure.
And for those of us in the fraud prevention community, that should feel validating. We fight better when we fight together.
What fraud leaders should take into 2026
Kyle closes with a mindset shift that I think every leader needs to hear:
Speed is not the enemy.
The question is not whether instant payments are too risky.
The question is whether your controls, workflows, and decisioning frameworks are mature enough to operate in a real time environment.
As institutions look ahead, key priorities should include:
- More preventative controls before payment initiation
- Better network aware fraud signals
- Smarter real time decisioning
- Stronger knowledge transfer inside fraud teams
- Clearer operational playbooks for instant payments
- Better integration between fraud prevention, payments, and operations
He also raises a concern that deserves more attention: institutional knowledge attrition.
That is real.
As experienced operators retire or move on, institutions risk losing the context behind the systems, controls, and processes they depend on every day.
Technology matters. But people still hold a massive amount of fraud defense together.
Episode transcript
Hailey Windham00:01
What's up, Fraud Fighters? Okay, today's episode is one that I think every fraud risk payments and operations leader really needs to hear. You we talk about fraud all the time, but we rarely talk about where in the payment lifecycle things actually break. Is it onboarding? Is it authentication? Is it speed? Is it recovery? Or is it our misunderstanding of what controls actually do? Today, I'm joined by Kyle Caldwell, head of fraud prevention from The Clearinghouse. And we're walking through fraud the way it actually happens, know, before a payment is initiated, at the moment of initiation, and after funds move, because once money moves, the rule changes. Kyle, welcome to Fraud Forward. I can't wait for the audience to meet you, know you, love you like I do. Yeah, so just welcome to show.
Kyle Caldwell00:49
Yeah, it's great to be here. We've known each other now for a couple years. It's been a great couple of years and I'm really excited to be here.
Hailey Windham00:58
Thank you so much. Yeah. The first time Kyle and I ever met, we were going to do a presentation together with Ruben Stewart for a conference. believe it was a proven fraud fight club did one. And we were talking about, what were we talking about? We've had so many things, but thank you.
Kyle Caldwell01:19
Identity verification something along those lines. Yeah
Hailey Windham01:21
Thank you. Identity verification. And I just remember that you and Ruben were talking and you were like being so, so big bank, right? And I'm sitting here like, well, that's nice for big banks, but the community banker side, like, here's what we can do. And I thought it was just great how we were able to have literally all those different perspectives.
Kyle Caldwell01:40
Yeah.
Kyle Caldwell01:46
Yeah, the perspective is really what you brought in that conversation and something that I continue to bring with me now, especially in my role. I look forward to this conversation as well as just continuing to learn from you and your experience and everything that you bring to the table.
Hailey Windham02:03
Thank you so much, Kyle. Okay, so we're going to dive into the conversation. We're talking about where fraud really enters the system, right? Because fraud rarely starts at the payment rail, right? It's all the things that happen before then. So let's start upstream. Before RTP, before wires and ACH, where do controls break down? So Kyle, when we look at payments fraud, where do think it actually starts?
Kyle Caldwell02:32
Yeah, it's a great question. It's one that I think is becoming a lot more relevant, especially now with how many solutions and technology providers there are out there. Where can the big banks, the small banks, the credit unions really look to invest and try to prioritize those investments to make the most sense? From what I've observed in my career, in most cases, the payment is simply the final step in a much longer chain of fraud. The real breakdowns occur upstream. So it's not the actual payment that is fraudulent. is was the account opened fraudulently right through the account opening process? Maybe the KYC checks weren't there or maybe something was bypassed. Maybe it's a legitimate customer, you know, now that we're talking about money meals, it's crazy to me that money meals is becoming more of a mainstream like word or you know description of a group of fraudulent activity. I remember when it was a Oh, you know, what is a mule? Right. And then, you know, trying to compare it to, you know, like the, the big drug mule, right. And it's like, yeah. And so, you know, there's, there's a, but there's various authentication control breakdowns or people pretending to be other people, people getting scammed. A lot of these things typically can be identified, you know, through the various multifactor authentication, you know, credentials, you know, all of these are compromised. Even then it's, you know, we, we used to observe fraud.
Hailey Windham03:35
You're right.
Kyle Caldwell03:58
from the IVR, right? Like a lot of people aren't aware that the IVR, the interactive voice response where you call in and you ask for help or guidance on your account sometimes provides information about that account that can then be used to verify if customer service teams are still using security questions, right? And it's really understanding the circular nature of this information and kind of how it's being used within the ecosystem. And a lot of times it's breaking well before that payment is ultimately initiated. And so when we think about the transaction, that distinction matters. Fraud prevention is a life cycle. It's understanding the full perspective of what a customer or what the fraudster's journey is through that. And really looking back at, well, yes, there may have been fraudulent payment but what ultimately broke down before that.
Hailey Windham04:59
I love that and I think that it answers the question of that misconception about that rail-based fraud. Is it happening truly on these payment rails or is it happening before? And so I guess the next part of my thought here is how much of RTP fraud is really a customer compromise issue versus a rail issue, do you think?
Kyle Caldwell05:23
Yeah, you know, it's one of those things that, you know, that misconception that faster payments means faster fraud. It's simply not what we're observing here at the clearinghouse. And I think that the framing oversimplifies the issue in a lot of ways. We typically see at the RTP network, and if you're not familiar with the clearinghouse, we own and operate the RTP network as well as provide ACH and, RT or excuse me, ACH and wire rails, for our customers. this is, know, something that we observed from the, that the fraud rate is lower than a lot of those other rails, especially when you compare to card. And so when we think about RTP fraud specifically, it's, it is a credit push system, right? And so that differs from, ACH and that, you know, there are debits that can be pulled out of the account. RTP has to have the sender authorization before they ultimately send those funds. And so a lot of times what we do see is that it is a customer compromise issue. They're being walked through, you hey, send this money, you know, hey, you know, this is good, right? Everything is on the up and up and the customer believes this, right? And, you know, sends those funds. Now, the big misconception is that faster payments means faster fraud is that the settlement is final. It's a design of RTP. actually helps to ensure that the funds are there, right? And that the funds are available. Now, this is something that we are currently really looking into in terms of what does that recovery process look like? However, it is something that we have to be conscious that it's not the RTP rail in and of itself. It's account takeover. it's social engineering, it's business email compromise, it's authorized push payment scams. And, and a lot of times these these funds are pushed to accounts that are owned by fraudsters. And that's something else to kind of keep in mind. And so when when there is our TP fraud, it's not just, hey, what controls broke down at the beginning, it's, hey, what controls broke down that allowed that account that's receiving those funds. And it's again, it's the entire lifecycle and ecosystem of
Kyle Caldwell07:46
of that activity that really needs to be reviewed and looked at.
Hailey Windham07:51
I can really appreciate that perspective and I love that you say that that's the misconception of know faster payments equals faster fraud because I'll tell you I almost got it tattooed on me. I I felt that way. I was like there's no way like I don't I don't want faster payments. Why are we doing this because then where where in the world can I you know interject or try to prevent or try to detect and so I'd love your opinions on. where do you think institutions are over indexing on detection, but maybe under investing in prevention?
Kyle Caldwell08:23
Yeah, and was the same way. know, candidly, it's, you know, I think that we get scared sometimes that, you know, once the funds are sent, that it's so much harder to call back or call back. But there is something to keep in mind is that instant payments are taking off globally. Right. And there are a lot of benefits to that. You know, just one of the things just to keep in mind before we talk through the, you know, the indexing of the fraud prevention solutions is that, you know, customers, especially now, And clients and end users they can get paid today, right the transaction the work, know everything that they're doing from their work can get paid right and so when we start thinking about the the you know institutions over indexing or under indexing, know many institutions do apply that wire or you know, ACH era controls to instant payments specifically around you know, that review, you know, they typically rely on the fact that the settlement is slower. And so that way they have more time, they have that buffer to review those transactions. However, with the way that lot of instant payment networks out there are now operating, a lot of controls need to occur before the transaction is pushed. And in fact, that's probably a lot of way, or that's probably how a lot of clients are. moving their fraud prevention programs to begin with. It's, you know, the the fraud is always the least costly to stop before the transaction is ever initiated. You don't have to recover. You don't have investigations. You don't have to file, you know, all of those potential SARS. Now you probably should, you know, in some cases where, you know, you see a large string of activity and you can tie it together and make that, hey, this is suspicious, but In terms of actually trying to recover the funds and reduce the loss, a lot of that can be occurred or a lot of that can process before the transactions ever initiated, specifically on the RTP network as well. Now, one of the things just to kind of keep in mind is that this is a fundamental shift of how we have thought about fraud, specifically in the payment side.
Kyle Caldwell10:39
And it is something that you also have to balance the customer experience for because when you're declining payments outright, that is a very negative customer experience in the event that that customers are trying to send, you know, payments, you know, to providers to, you know, large scale organizations that, you know, they're paying them for something. A lot of times, though, I also feel like there's an educational piece, which is Customers never want to lose money and customers I think are now becoming much more aware of fraud and scams. I'm having conversations every day now even with my eldest family members around fraud, right? And what this means. And I think that that bias around what customers don't wanna be stopped is something that is changing. Like that paradigm is shifting. As long as you can explain why they were stopped. and what the reason of that is. I'm finding that it's actually a customer service issue. mean, you know, Karen Boyer, and I'll continue to say this. Yeah, you know, she says that fraud prevention's the new customer service, right? In a lot of ways, in a lot of ways that is 100 % true. So shout out to Karen, because anytime I use that quote, I like to attribute it to her.
Hailey Windham11:43
I was just about to say that.
Hailey Windham11:59
Same, same. I will never forget one day I used that quote. I called her and I was like, hey, can I put this in my slide? was when I was doing something for Operation Chamrock. And she goes, absolutely, go ahead. And I was like, is this exactly what you said? She goes, no, fix it. Then this is what I said. so, know, fraud prevention is the new customer service and fraud is the new friction. And so I loved it, but she sent me a text.
Kyle Caldwell12:16
Ha ha.
Hailey Windham12:27
you know, it was a couple months later and she goes, so I'm at another conference and I'm quoted with my same quote that you use. So somebody took that and now it's like at all these conferences that Karen's quote shows up. I love it. Karen is the OG, right?
Kyle Caldwell12:39
Yeah, yeah, yeah, she's definitely the huge influencer and thought leader in the space.
Hailey Windham12:48
Absolutely. So I think the point that we were trying to make as far as like the beginning of the payment, right, is that if fraud shows up at the payment rail, you're already late, right? It's not that it happened on the rail. It's that it happened before. And so now we're going to talk about the moment of payment initiation. So speed changes expectations, right? Not the responsibility. Let's talk about that critical moment. The second the payment is initiated, because this is where fear lives for a lot of institutions. Again, it's what I said that I was going to put that tattoo on. Faster payments is faster fraud, but in reality, that's not it. So I would like you to double click on, you started mentioning it a little bit ago, but what controls exist in RTP that maybe people just don't fully understand?
Kyle Caldwell13:38
Yep. So it is a credit push model. This is by design. It has helped to reduce the amount of just general account compromise that you would typically see where the account information would be compromised and the debits would be pulled. Being that it is a credit push system, we are seeing a drop in that overall activity. Of course, this means that it is susceptible to authorized push payment scams, as well as some of other activity where scams can be and do live. the credit push model does help to prevent that third party compromise. The pre-funding and just the funds verification process, meaning there has to be funds available for that transaction to be sent, you know, reduces check guiding or other forms of guiding around the overall credit risk associated with those payments, right? The funds are there, they're available to be used. You're not going to have to worry about them getting clawed back or pulled back, right? And so like that helps to reduce you know, the funds kind of just inflating balances and then ultimately, you know, pulling those balances out. There is, and something that I don't think that is well known, there is an identity, you know, framework or rule capability that we do have within the RTP network. One of the things that, you know, we're observing is that when funds are sent, you know, how do you get that money back? The identity framework is, you know, or does help to address that concern. So there is a way that based off of the return fund process, and I won't get super technical because I don't want to lose anyone, right? But effectively when you do request the funds back through the RTP message, you can include an indemnity code or specifically, you know, this was a fraud payment. We're sending it with indemnity to indemnify, you know, the receiving bank to pull those funds and send, you know, what's available back to our customer. So, This is something that I don't feel is widely known. It's one of the challenges that we're hearing from other banks and it's something that we're continuing to think about and vocalize and ultimately try to push just so that way we can see the positive impact that comes with that framework.
Hailey Windham15:38
Thank
Hailey Windham15:56
I love that. If I had a dollar for every time I sent a warranty or an indemnity to another FI and maybe the mailing address was wrong, or maybe it went into this bulk stack that never got reviewed, having the ability to send that in real time, I mean, that makes it worth it. So I love that you mentioned that.
Kyle Caldwell16:10
That's right.
Kyle Caldwell16:17
Yeah, it's, you know, to your point reduces all of that manual labor when you can just send it with us, like basically an action code, right? And it tracks, you know, we can pull it from the system. It's not mail that gets lost. When I learned about this, I was like, my God, this is great. Like, yeah, we need to talk about this more.
Hailey Windham16:27
Yeah.
Hailey Windham16:37
Yeah. For real, I'll never forget. you know, the, the Notch framework, right? Whenever they did the risk management portal and you could see where to contact and who to call for sending some of these things. I'll never forget one FI, they were like, you fax it. And that this was like three years ago. And so I'm like, I don't even know where our fax machine is in this place.
Kyle Caldwell17:01
That's right.
Kyle Caldwell17:04
Or even if they're monitoring their fax machine, right? Like how often do those die? I know that those documents get often but a lot of times that your point of contacts are email boxes, right? They're not people and you know, the nice thing too with the you know, with the way that this is set up is that this should in theory go directly into case management services that are you know, that that can be worked, right? And it's tracked there. You never have to worry about updating a point of contact because it's going to be within the system.
Hailey Windham17:15
Yeah.
Kyle Caldwell17:34
Yeah, it's it and it's something that we hope is know continues to get catch on and Of course welcome any feedback in terms of how we can make it better. That's something else. That's part of my role. So just let me know
Hailey Windham17:46
Love that. Shout out to Kyle, if you guys have any questions about how we can do it better, let him know. So you mentioned before a fraud service within RTP. What does that service that you guys are enabling actually do?
Kyle Caldwell17:48
Yeah, please. Yep.
Kyle Caldwell18:03
Yeah, so this goes back into when we're thinking about the indexing of fraud services, right? The model that I think a lot of organizations now are moving towards is pre-transactional insights. So once a transaction enters the RTP network, it settles, right? It's within five, 10, 15 seconds. It's very fast, usually much faster, but we like to give a buffer of the SLA just to... you know, make sure that we hit that. our RTP fraud service provides that pre-transactional insight before it enters the RTP network. So effectively when a payment comes through, it is optional, know, a customer can call in, it depends on however they want to set up their workflow. We are not providing. Unapprove or deny, know, we're not we're not providing, know an aunt or an extra or replacement of a service It is an ancillary service that's intended to be used as part of the existing fraud services that clients utilize So depending upon that that policy manager or whatever that initiation process is they can call over to the clearinghouse the clearinghouse provides risk signals These signals are about the receiving account. So before you send money, you'll have information about who's receiving it and includes computations of receiving account balances, know, their payment activity, whether or not the ratio of activity, you know, coming in and going out is unusual, you know, attempting to identify those money mills that we were just kind of talking about. And it also provides the some confirmed and suspected fraud tags. These tags are generated through our case management or workflow system. Case management, think, comes with this. man, they're creating this extra portal that I need to go manage. I used to be on that side. We are thinking and we are prioritizing API connectivity. that way it connects. Just as this risk service will connect.
Kyle Caldwell20:19
into your existing policy manager, this case management service will connect into existing case management services. And ultimately the goal is to get that fraud reporting and the final disposition of these cases that we can then turn into risk insights and provide back to the network participants. So ultimately the goal is really just to help create that network transparency. It's one of those things that when we look at partnership and when we look at how we all combat this together. Only the clearinghouse can provide this level of network level transparency. And our goal is just to provide that out to providers, to credit unions, to big banks, small banks. It's intended to be a service that helps everyone and not just particularly focused on any one sender.
Hailey Windham21:14
I think that's wonderful. think it's also, it kind of moves us to that real time decisioning versus the after the fact investigations, right?
Kyle Caldwell21:25
Yeah, for sure. Yeah, and it's, you know, this, this, it's not about always, you know, eliminating that investigation. There will always be false positives. There will always be false negatives, right? But the goal is to help reduce the downstream operational costs. So that way the fraud teams can focus on what needs to be focused, right? If we can help them say, Hey, this is the activity that ultimately you need to review or you know, you can help review. That reduces all of the extra, you know noise that's in you know, that's in their space and they can focus on what's important You know if something slips through recovery, you know recover it right if something doesn't slip through, you know help us understand like what we can do better at the clearinghouse perhaps a Risk signal could be tuned right and that's something else too is that you know part of just our overall pragmatic framework here at the clearinghouse our goals to deliver and meet our customers where they need us and That's certainly a big part of it. again, investigation is expensive. If we can help reduce that cost, or if customers can reduce that cost by calling our services, that's our goal. So, yep.
Hailey Windham22:41
perfect tee up to our next segment of the after, the recovery reality check. And the theme in the past especially has been once funds move, recovery depends on relationships. If I didn't have a contact at XYZ Bank, I was going to be stuck in a queue. But we're talking about how that could look differently. So the money move, now what? Again, this is where things can get comfortable. uncomfortable. What percentage of funds are realistically recoverable after movement do you think?
Kyle Caldwell23:11
Mm.
Kyle Caldwell23:18
Yeah, it's something that, you know, recovery is uncertain. And I think that uncertainty makes it very uncomfortable. You know, it's one of those, you know, one of those other statements is, you know, prevention is ultimately measurable because you can measure the real world impact. You know, one of the things that, you know, we typically observe is that, you know, through this, the systemic reporting that we're seeing, you know, it is something that occurs off network quite a lot. You know, one of the things that the way that RTP operates in order to send, you know, funds, have to be a sending participant. That also means that when receivers who just receive only when they have funds that they want to send back, they cannot do that through the RTP network. And so and so it's something that, you know, when they do recover those rates or when they do participate in that recovery process, a lot of times they were, you know, they respond back through
Kyle Caldwell24:16
A camp 29 response bear with me. It's effectively an acknowledgement that hey, we're going to work with you and send this money back to you Conversely a camp 29 could also be hey, we're not going to work with you right but just in the event that they do it's they typically list the Sending instructions, know back like hey, we're going to send it this way that way and you should expect it into potentially this account Right. And so a lot of times it does obscure What is a true recovery rate of instant payments? And it's something that we're looking at improving and trying to think about, you know, and again, not trying to be over committing and I have to be aware of my role now at the clearinghouse and what I say, but it is something that we are ultimately thinking about how can we make this better? Because any time you have that void or a void in the narrative, it gets filled, right? And we're really working on
Hailey Windham25:14
Yeah.
Kyle Caldwell25:16
thinking about how we can, again, help meet our clients and ultimately help shore up that recovery process so that way it is fully transparent and it does benefit based on what we bring to the RTP network.
Hailey Windham25:32
I love how you've answered all these questions, but it does mess up my question list because you answer all the questions before I can ask them. No, it's great. It's just a way for us to truly get a full understanding. I love and appreciate that that's how you answer those. Because one of the things that I wanted to kind of make sure that we called out for the listeners to understand is that
Kyle Caldwell25:41
I'm sorry.
Hailey Windham26:01
the recovery process that's different between RTP wires and ACH. So just for the record, with wires, you've got to send that message back. They may or may not answer it. Like literally you may not get a response at all. And ACH, you've got to work on timelines and you can try to send that return file, but if it's not there, mean, so it's a big difference. And I love the approach that the RTP network is having with as far as like it's real time.
Kyle Caldwell26:33
Yeah, you know, recovery is cooperative. You know, we do expect our participants to, you know, work together. A lot of times though, you and you know, you know this from your days with working with credit unions and in credit unions. There's a lot of process that goes along with that, right? And process is typically, you know, sometimes that is a overhang of, you know, capability, right? Meaning, Um, you know, a lot of people follow processes because that's what been, you know, that's been, you know, been the proven effective measure. And if, you know, waiting for a response or if, you know, doing that extra, you know, call to another institution doesn't fit within that process. And a lot of times the recovery kind of stops. Um, one of the things that I, and I have not talked to this person specifically, but I know that you work with her quite a lot. I believe her name is Jen, Jen Lamont. that
Hailey Windham27:29
yeah!
Kyle Caldwell27:30
So she she posted recently and I forget where but sometimes that extra phone call is The difference between and I think I'm paraphrasing right but sometimes that extra phone call is the difference between making a customer whole or Leaving them hanging right and and you know that has real-world impact and that stuck with me I think that was through a like a whatsapp group that we're all on that I that I read But it's something that I can I just I'm really looking forward to meeting her just as a side note and you can totally remove this from our recording, yeah, I, yeah, yeah, I'm looking forward to it as well. So yeah, but all that to be said, you know, it is, is, you know, we are a big family. We should all be working together and being, you know, cooperative, but also making things easier, makes it easier for everyone, right? Yep.
Hailey Windham28:00
No, no, She's a great listener and a great friend and I can't wait to introduce you guys.
Hailey Windham28:20
Right. Yeah. I love that so much. And it just speaks to the collaboration, the family unit. you said, mean, truly when I meet another fraud fighter in the wild, I love it. And it's different. Like we go to, you know, a banker's conference and you're like, okay, which one's the fraud fighter? Because I don't necessarily want to talk to risk necessarily. They might be.
Kyle Caldwell28:47
Yeah, I mean, they all have grimaces on their face, but as soon as you walk up, they smile, right? And like, I know you. Yeah, and I realized I kind of went into your potential next question, which is tell me more about that collaboration. So I don't know why I keep doing this to you. I'm probably the worst guest that you've had. yeah, collaboration is ultimately necessary, right? We're all in this together.
Hailey Windham28:51
They smile, yeah. I know you.
Hailey Windham29:08
My favorite so far.
Kyle Caldwell29:16
We're all trying to save the same or solve the same problem, right? It's each of us has a role to play. If one of those, you know, links in the chain breaks, then the whole system breaks down or it becomes a lot more painful. and I think that that's something that we all need to keep in mind. It's we all of course have our core objectives, right? We all have, you know, our goals at the end of the year, we all have our priorities. At end of the day, you know, I'm in this job to prevent financial harm. to the overall ecosystem, right? You're in this job to help influence and prevent harm to all of your customers, clients, and everyone that you've supported, right? I think we all, and this is something that I found about fraud people, we're all pretty much aligned to that objective. It's to just stop harm and help people. And I think that when we do get on calls, when we do have differences in how to do that, taking a step back, And just remembering that we're all ultimately trying to meet that objective really helps to kind of reset the baseline and say, okay, I understand what you're saying now. How do we actually fix this and move this forward? And how do we ultimately, you know, continue to drive that, that collaboration both around investigations around, you know, opera, you know, like inter FI workflows, you know, how can we make this better? Because, know, fraudsters, they don't care, right? Like sometimes I find that we end up talking more about definitions of words and problems than actively stopping the activity, right? And it just is like, is this really the best use of our time? Like they're not talking about, they could care less what they're, however, they're framing this new thing that they've come up with, right? They don't care. It's, you know, we do. And so we need to keep that in mind, right? So.
Hailey Windham31:05
They don't care.
Hailey Windham31:10
For sure, for sure. So, and that tees up perfectly also the next question that you didn't answer. So thank you for that. What mistakes do institutions make post-loss do you think?
Kyle Caldwell31:16
Hahaha,
Kyle Caldwell31:23
Yeah, I think, you know, of course not using the indemnity process correctly, you know, keep in mind because this is a credit push system, the funds are going into an account, right? A lot of times fraudsters are not going to send money to an account that they don't own. I'm sure it's happened, right? But most times that they're going to go through the process of stealing money, right? Or convincing someone to send the money. They're going to have some
Hailey Windham31:27
Thank
Kyle Caldwell31:51
ability or ownership of that account, right? so when you think about trying to remove money from an account and The fraudster saying you can't debit my account then it kind of ends there, right? That's what the identity identity process is working to you know help control and that's something that's often missing So I would definitely say that's a that's pretty common issue and can help resolve, you know some of that activity that may typically stop from within that recovery. We also just released a compliance bulletin, I believe, talking through that a little bit more, just reminding organizations that the indemnity process is there and can help. Failing to prioritize the highest risk case is something that I think we all feel at times. Think about case managers, systems. And how that prioritization with even within like the alerting process works, you know, sometimes And i've seen this before, you know, like if I uh, if a case always gets moved to the bottom if there's a new alert that's generated And it's because well, you have to work the oldest one first, but the new you know, the new case now has a new alert So it gets inadvertently moved down I mean that that's you know a problem, right? And know, if anything, that's your highest
Hailey Windham33:06
Yeah.
Kyle Caldwell33:08
Your highest alert or your highest priority because the activity is still occurring and you have the opportunity to stop it So so definitely, you know, keep that in mind. It's not always about the highest dollar. It's not always about You know the fact that it's coming from a you know, a region that is typically associated with fraud Really just look at how you know, these cases are being prioritized and how you know, your teams are working them
Hailey Windham33:16
Right.
Kyle Caldwell33:38
You know, one of those things, and you know, I'll point this back out. felt, I felt really good about myself one day when I stopped, you know, this, this huge money, money, new, money movement activity. and then three months later, I realized the fraudster didn't actually stop. He just changed. And I said, he, right. But they just changed their, their activity from, you know, making large dollar amount withdrawals to dollars. and they use bots. And so like, was like, this is a $3 case, $3 case, $3 case. Over three months, it was a lot of money, right? And, you know, that was definitely an opportunity of mine to reprioritize those cases at that time. And the last thing is just keep thinking about how you're applying legacy playbooks to instant rails. Candidly, they're not set up necessarily to support, you know, the way that we're moving money today. Really think about...
Hailey Windham34:15
Ahem.
Hailey Windham34:33
you
Kyle Caldwell34:38
the rail, really think about how the money is entering, how it's leaving, and work to apply those controls to instant payments. And you'll find that to be a very worthwhile endeavor. Again, from my perspective, always here to help. So whether it's connecting through you to me, whether it's you pulling all these ideas, Haley, and us talking. I want to hear it because again, this is a service, a tool, we're here to help.
Hailey Windham35:10
I love that so much and I think we can end this section with recovery is not a strategy, but prevention is. And that's definitely where I think our mindsets should be as far as what should be more important. Do we focus on how do we recover or do we focus on how can we prevent this from ever happening? Yeah, so, okay. Real quick before I let you go, because I'm really enjoying talking with you. So the future of life cycle fraud controls. I'd love your thoughts on how fraud controls must evolve with instant payments, right? Where does AI fit in all this and where does it not? What are you thinking?
Kyle Caldwell36:00
Yeah, it's a great question. I would definitely continue to prioritize controls that are preventative. I think AI definitely will help with the prioritization, the perspective, the view. Even in the recovery process, I've seen some cool things regarding helping with narratives, which is pretty neat. pretty big time save. Do I think that we're at a point where AI is truly capable of stopping, identifying or mediating, working with customers? It's hard for me to say. But I do think that the more that we can apply some of these tools to our day to day and where it makes sense and where our governance allow us, right? I think that you know, it's something that fraudsters are using them today, right? We need to, again, use them. You know, of course fraudsters don't have all of the, you know, model validation, AI, you validation, you all of that paperwork that I think comes along with it. But I do think that it is something that we'll continue to kind of modernize as we continue on. Now, the last thing that I'll say is that, We need to be more network aware of activity. It's not just one organization sending to another organization. It's, you know, what is that? What does the network see overall regarding that activity? And how can we utilize those insights to be more informed before that money ultimately leaves? Right? Because if you know that account that you're about to send to is, you know, 16 confirmed frauds.
Hailey Windham37:53
Yeah.
Kyle Caldwell37:54
probably not a good place to send money, right? But yeah.
Hailey Windham37:56
Probably not. So is there anything that you worry about that others aren't even talking about yet?
Kyle Caldwell38:07
Yeah, I mean, there's a lot that I worry about from a generally anxious person, but that's okay, right? But I think, yeah, I mean, it also doesn't help that I'm addicted to coffee and then I'm constantly just, probably also another fraud fighter trait, right? But, okay, good to know. Yeah, I am generally concerned about,
Hailey Windham38:11
Mm. I also think that's a fraud fighter trait just, just why I...
Hailey Windham38:25
It is, is, yeah. Or Red Bull if you're Jen Lamont, just FYI.
Kyle Caldwell38:37
institutional knowledge attrition. You we talk a lot about technology and technology gaps, but let's even talk about, you know, of our existing technology, who actually knows those systems, right? Who built them? Where are they now? A lot of times those, those, you know, early adopters of services that we've brought into our, our organizations and to our institutions are no longer there, right? And so they might know some of the skeletons in the closet that might pop out and spook you one day. And, you know, there's, there's, you know, so much out there that, you know, that is actually starting to keep me up at night. You know, people retiring, you know, and again, good for them, right? It's not, you know, I'm glad that people are retiring, but it's what kind of knowledge transfer are we really spending time with the people that know these systems the best? And as we introduce, you know, new integration layers into our services to help cover gaps. Are we inadvertently creating new ones? Because we never really fully understood how that system worked. And we always just kind of took the guy in the corner that brought it in 20 years ago, right, for granted. And we never took that time to really understand it at a granular and technical level. And that's where the fraudsters will continue to attack us is in those gaps. And as we continue to transition, being that typically we're, especially now with agile and pragmatic framework, it is iterative over time. And so if we're not doing a big bang and we're iterating the releases over time, fraudsters will exploit that too. They exploit those transition periods. So just that's what's keeping me up. If I had to tell you again, it's not the technology, it's... It's people, but I think people will keep us up, right?
Hailey Windham40:37
I could not agree more. I actually just had this conversation. I believe I was talking with Frank McKenna and I was like, you know, AI is great. And I love that we're training new analysts on that and how to use it. But like, are we really losing knowledge? Like of how to conduct an investigation with like to be able to say that we won't be dependent on the AI. And I remember, you know, I just did an article for.
Kyle Caldwell40:56
Yeah.
Hailey Windham41:05
International Women's Day talking about the women that you know, that believed in me before I believed in myself and Ms. Libby B. She was a, you know, 40 plus year community banker. She was there when they were literally scanning the checks and mailing them to the Fed, you know, and so.
Kyle Caldwell41:24
Yeah.
Hailey Windham41:26
I just, cause when I walked in and she was trying to explain like banking operations to me and we had IT set up in this other room and she goes, yeah, that used to be where we would sort checks to where, which a federal reserve bank it needed to go to. And I was like, wait, wait, wait, what? And like my mind was blown, but having that kind of knowledge to know like, look, we got to know where we started to where we are, because if there is a fault line somewhere, we may have to revert back to try to figure out where the issue is.
Kyle Caldwell41:54
Yeah. Exactly. Yep.
Hailey Windham41:55
So I could not agree more. Okay, last question. And then I promise to let you go. If you could leave fraud leaders with one mindset shift about payment fraud, what would it be?
Kyle Caldwell42:08
Just that speed is not the enemy. Faster payments do serve a purpose. They are beneficial to the overall network. It's about being preventative versus reactive. And in that, think is the mindset shift that we need to take with us. And Haley, it's always a pleasure when we get to connect and talk. I'm just very thankful for this opportunity. And I think it'll be at the fraud.
Hailey Windham42:10
Thank
Kyle Caldwell42:37
Fight Club and PJ would probably give us some crap if we didn't mention that as well. So I'm really looking forward to it.
Hailey Windham42:38
Yeah.
Hailey Windham42:45
Yeah, for sure. Yeah, me too. Very excited for Fraud Fight Club. And if you don't know about it, you're living under a rock and look at any of our profiles and we'll definitely send you there. yeah, so that's coming up in April and I am very excited for that. Kyle, thanks again for joining me today. I really appreciate you, you know, bringing your perspective and...
Kyle Caldwell42:53
Hahaha.
Hailey Windham43:09
for the clearinghouse allowing you to come on and talk through some of these things so we can get a better idea of what's going on in the industry.
Kyle Caldwell43:16
Yeah, again, thank you for the opportunity. Please reach out if anything I said sparked an idea. Again, we're here to solve problems for everyone. And that's what I can commit to everyone. So again, thank you for the opportunity, Haley.
Hailey Windham43:28
For sure. Fraud fighters, this conversation is a reminder that fraud is not a rail problem. It's a life cycle problem. If we only focus on the during, we miss the before. If we rely on recovery, we've already lost. And if we don't understand the controls built into the rails we use, right, we're fighting blind. So again, Kyle, thank you for helping us break this down in a way that's practical, honest, and strategic. And for the rest of you, stay vigilant, stay informed, and keep moving fraud forward.
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