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CBA to CFPB: Join Banks’ Efforts to Protect Consumers From Scams
As banks continue leading efforts to fight fraud across the industry, Consumer Bankers Association (CBA) President and CEO Lindsey Johnson in a new letter urged Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra to work in tandem with the banks to protect consumers from increasingly prevalent and sophisticated financial scams across peer-to-peer (P2P) payment platforms.
As part of a whole-of-government response, Johnson laid out how the CFPB can specifically bolster ongoing fraud prevention efforts, noting:
“One of the most meaningful ways the Bureau can immediately partner with the industry to protect consumers from falling victim to these scams is through broader consumer education, which is one of the six ‘primary functions’ of the Bureau – core to its mission – and essential for consumer protection.”
Reinforcing the benefits of consumer education in combatting this type of fraud, Johnson continued:
“Studies have shown consumer education effectively helps identify and combat different types of financial fraud. In fact, according to research from the FINRA Investor Education Foundation and the Center for Economic and Social Research, which examined investment fraud, ‘repeated exposure to concise, online educational interventions’ strengthens consumers’ financial literacy and reduces their susceptibility to fraud. CBA believes consumer education regarding P2P scams will yield similar positive results.”
Specifically, Johnson called on the CFPB to direct unallocated funds in the CFPB’s Civil Penalty Fund – which is estimated to have a balance exceeding $2 billion – toward consumer education initiatives focused on financial scam identification and prevention, writing:
“CBA strongly urges the CFPB to direct unallocated funds in the CFPB’s Civil Penalty Fund toward consumer education initiatives focused on financial scam identification and prevention in accordance with Section 1075.107(a) of the Consumer Civil Penalty Rule (the Rule). These education initiatives will help bolster efforts already underway to teach consumers how to spot scams on P2P payment networks and internet transactions, further preventing consumer harm before it occurs.”
To read the full letter, click HERE.
In November, Johnson outlined in American Banker tangible steps policymakers in Washington could take to support and protect consumers and small businesses amidst ongoing economic uncertainty, including working in tandem with banks and across government agencies to prevent fraud. Championing the need for a whole-of-government approach to combat the rise in scams and prevent consumer harm, she wrote:
“[Banks are] taking significant steps to actively prevent, detect and mitigate scams. But they cannot do it alone. Congress and regulators must work collaboratively with the industry — in a whole of government approach — to prevent bad actors from harming consumers in the first place.”
To read the op-ed, click HERE.