In a joint letter today, the American Bankers Association and three banking associations said they opposed legislation to require financial institutions to reimburse customers for electronic fund transfers that took place because the customer was scammed into sending the payment.
The Protecting Consumers from Payment Scams Act, which has been introduced in the House [H.R. 9303] and Senate [S. 4943], would amend the Electronic Fund Transfer Act to mandate that reimbursements be evenly split between a customer’s financial institution and the institution that received the fraudulent transfer. In their letter to the bill’s sponsors, the associations said the policy change would do nothing to stop criminals and instead encourage them to continue committing crimes. It also would put many financial institutions—particularly smaller, community institutions—in the untenable position of having to restrict access to deposit accounts.
“To offset expensive scam losses, financial institutions may have to be more selective about who qualifies for an account and charge more for basic banking services,” they said. “This could have a negative effect on financial inclusion, at a time when we have been making significant progress in reducing the number of unbanked in this country.”
The associations added that banks work tirelessly to identify and report suspicious activity to law enforcement. “However, the activities of these criminals touch more than just the banking industry, and the efforts to thwart scams must similarly be cross-industry and include government support,” they said. The groups also called for a comprehensive national scam and fraud prevention strategy to develop and implement a coordinated federal approach to stopping scams and assisting consumers affected by scams.
