ABA today joined three financial trade associations in pushing back against a report issued by Sen. Elizabeth Warren (D-Mass.) examining fraud related to instant payments sent via the Zelle network. The report criticized banks for their anti-fraud efforts, citing bank data.
“Today’s report from Sen. Warren fails to acknowledge that 99.9% of the five billion transactions processed on the Zelle network in the past five years were sent without any report of fraud or scams,” the trade groups said. “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.”
The groups also emphasized that banks “take steps to mitigate instances of fraud and criminal activity,” 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.”
The Warren report also called for a change to Regulation E that would expand the current liability framework for banks, which the groups also vigorously opposed, warning that doing so “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.”
Data previously released by the Bank Policy Institute confirms that Zelle remains the safest option for consumers seeking to move their money through peer-to-peer payment apps. Zelle had the lowest rate of disputed transactions when compared to Venmo, Paypal and CashApp—in fact, the share of disputed transactions made using CashApp was six times higher than those on Zelle.
“The report issued today offers no constructive solutions to better prevent and crack down on fraud,” the trade groups said. “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.”