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CBA, Leading Financial Groups Respond To Senator Warren’s Report On Zelle
October 3, 2022
The Consumer Bankers Association (CBA), American Bankers Association, Bank Policy Institute, and The Clearing House today issued the following statement in response to a new report released by Senator Elizabeth Warren (D-Mass.) concerning Zelle:
“Today’s report from Sen. Warren fails to acknowledge that 99.9% of the 5 billion transactions processed on the Zelle network in the past 5 years were sent without any report of fraud or scams. Zelle has soared in popularity with bank customers because it’s fast, free and easy to use. Customers also take comfort in knowing that Zelle transactions are provided by and through their trusted bank.
“That doesn’t mean that Zelle, just like every other instant P2P payment service, is entirely free from those who seek to defraud the American consumer. Banks know this and take steps to mitigate instances of fraud and criminal activity. For example, banks routinely warn customers not to send money to people they don’t know, often using innovative technology to urge their customers to show caution. In addition, and contrary to Sen. Warren’s report, banks are obligated under federal law to investigate every instance in which a customer disputes a transaction made via Zelle and provide reimbursement if the transaction was unauthorized, an obligation banks take seriously to ensure protection for their customers.
“Expanding the current liability framework for banks, as the report suggests, would force Zelle providers to either scale back Zelle’s popular instant P2P services given the financial risk, possibly limit the instantaneous features or impose fees to recover their additional costs. Either way, consumers’ access to these valued services would be limited, forcing them to meet their needs outside the well-regulated banking system. Further, a change in the current framework would have a chilling and disproportionate impact on community banks, and all small financial institutions, and some would be unable to offer P2P payment services altogether given the potential for unlimited liability. Moreover, Senator Warren’s report fails to address consumer fraud on nonbank P2P providers, like Venmo, Paypal and CashApp, where a recent BPI survey showed the prevalence of fraud to be much greater than on the Zelle network, on a proportionate basis.
“The report issued today offers no constructive solutions to better prevent and crack down on fraud. We urge policymakers and law enforcement to join with the payments industry in focusing on steps to prevent bad actors from scamming customers out of their money and educating consumers on how to use these services safely. Let’s stop the criminals rather than create policies that risk diminishing the value and benefits of this increasingly popular and indispensable service.”