The US Faster Payments Council has published guiding principles for fraud dispute resolution in instant payment environments.
Developed by the FPC's Fraud and Scam Mitigation for Faster Payments Work Group, the document, which is entitled `Instant Payments Fraud Dispute Resolution: Guiding Principles for the US` is intended to help financial institutions, payment operators, and other ecosystem participants design dispute frameworks suited to the specific characteristics of instant payments, particularly their irrevocable nature.
Addressing the challenge of irrevocability
Unlike traditional payment methods, instant payments typically cannot be reversed once initiated. This creates a distinct challenge for dispute resolution: standard chargeback and reversal mechanisms that apply to card payments or ACH transfers are largely inapplicable. The FPC report targets this structural issue directly, covering four categories of fraud: unauthorised fraud, authorised push payment (APP) scams, first-party fraud, and request-for-payment fraud.
Rather than prescribing specific liability rules or regulatory mandates, the report offers 11 flexible guiding principles that organisations can adapt to their own capabilities and use cases. These include establishing structured dispute workflows, recognising shared responsibility among all ecosystem participants, supporting vulnerable consumers and small businesses, and promoting transparency through ISO 20022-aligned messaging.
The report also recommends the use of risk-based fraud mitigation tools and sets out clear operational responsibilities for both sending and receiving financial institutions, representing a distinction that has become particularly relevant as regulators and industry bodies in multiple markets debate how liability should be allocated in APP scam cases.
Drawing on international precedent
To inform its recommendations, the Work Group examined existing frameworks from several jurisdictions and payment systems. These include the UK's APP scam reimbursement regime, Brazil's Pix ecosystem, Nacha's forthcoming credit-push enhancements, and dispute handling practices employed by card networks. The inclusion of international examples reflects a broader trend in the US payments industry of looking to more mature instant payment markets for practical lessons ahead of wider RTP and FedNow adoption.
Lee Kyriacou, Partner at PayGility Advisors and Chair of the FPC Fraud and Scam Mitigation for Faster Payments Work Group, cited in the report noted that speed and dispute resolution are not mutually exclusive, and that clear, consistent processes are essential to sustaining consumer and business confidence in instant payments. Shelley Rojano, Executive Director, Payments Risk Management at JPMorgan Chase and Vice Chair of the FPC Fraud and Scam Work Group, which participated in the Work Group, described dispute resolution as a 'defining trust issue' for adoption, given the irrevocable nature of many instant payment types.
The report positions itself as an industry-led response to a problem that, if left unaddressed, could constrain the growth of instant payments in the US. With FedNow having launched in 2023 and RTP continuing to expand its reach, the practical question of how to handle fraud-related disputes is becoming more pressing for financial institutions navigating onboarding decisions and consumer protection obligations.
