ABA cautions against shifting liability for P2P scams

Any measures to shift liability to financial institutions for peer-to-peer payments that a consumer authorizes and later claims were paid to a scammer will harm consumers by diminishing the availability and value of P2P payments, increasing consumers’ costs, reducing competition, and enriching and encouraging criminals, the American Bankers Association said today in a letter to the Consumer Financial Protection Bureau.

ABA and two community bankers attended a listening session with CFPB staff on Sept. 29. The letter reiterated and supplemented points made in the listening session to explain some of the scams banks and their customers are experiencing, steps banks take to prevent scams and other fraud, and the significant banking industry efforts to educate customers about how to avoid being a victim of fraud. In addition, it highlighted ABA members’ concern about the implications and unintended consequences if liability for payments that consumers authorize—but later claim were part of a scam—is shifted to banks.

“Shifting this liability to banks is not authorized by EFTA and will ultimately harm consumers and competition,” ABA said. “Many banks will reconsider whether to offer P2P payments, whether to be more restrictive in access and options, and whether to begin charging for the service, which is now free at the vast majority of banks. In addition, consumers will have to wait to use their money. In effect, the value proposition of P2P disappears.”

ABA noted that fraud was rare compared to transaction volume, with 99.9% of the 5 billion Zelle transactions processed in the past five years without issue, and that banks have made significant investments to fight scams. It also noted that banks also have limited insight or opportunity to intervene in consumers’ payment decisions, the association said. “Indeed, consumers are in the best position to know the reasons they are sending money, the circumstances of the payment, and who the recipient is.”