USA Law and Practice Contributed by: Margo H. K. Tank, Michael Fluhr, Deborah Meshulam, Kristin Boggiano, David Stier, Liz S. M. Caires, Adam Dubin, Emily Honsa Hicks, Meghan Carey, Kathleen Birrane and Eric Hall, DLA Piper LLP
• scope of access; • authenticating account holders; • elimination or restriction of “screen scraping” by data aggregators; • data transmission, accuracy and protection; • distribution of risk for loss and damages; “pass-through” terms for account holders and third parties; • delivering notices and disclosures to account holders; • record retention requirements; and • security reviews and audits. 12. Fraud 12.1 Elements of Fraud Generally, claimants may demonstrate fraud if they establish: • a material false statement; • knowledge that the statement was false when it was made; • reliance on the false statement by the victim; and • damages resulting from the victim’s reliance on the false statement. In certain circumstances, an omission of a mate - rial fact may also support a fraud claim. Examples of fraud include false advertising with misleading claims about a product’s benefits, returns, or risks, misleading terms and condi - tions when taking out a loan, and identity theft. 12.2 Areas of Regulatory Focus Regulators have historically focused on digital asset fraud schemes such as Ponzi schemes, romance scams, and SIM card hacking. How - ever, recent regulatory focuses involve identifica - tion and authentication fraud. In 2024, the DOJ
reported extensive attention to financial frauds, including bribery, market manipulation, con - sumer and investments, and cryptocurrency and NFT related fraud. Stolen card data has surged with data posted on dark and clear web plat - forms. Additionally, scam e-commerce and dark web card validation activities have increased. Fraudsters are increasingly exploiting modern payment technologies and social engineering to bypass anti-fraud measures, and check fraud persists in the US. 12.3 Responsibility for Losses Fintech service providers may be held liable for customer losses. For example, if a provider fails to deliver services as agreed or does not meet the performance standards in their contract, it may be responsible for financial losses and other contractual damages. Additionally, failure to comply with obligations under applicable financial regulations, such as data protection laws, can result in compensa - tion for damages such as identity theft due to data breaches. Engaging in deceptive practices, such as false advertising or UDAAP can lead to refunds and compensation for financial losses. Further, fintech providers may be held accounta - ble under federal or state law and by contract for losses resulting from fraud and security breach - es. If their platforms are compromised, leading to unauthorised transactions or account takeo - vers, they may need to reimburse customers for losses and costs like legal fees, particularly if they employed inadequate security measures. Finally, fintechs may be liable for negligence if they fail to exercise due care in providing ser - vices and their failure results in customer losses.
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