Sen. Elizabeth Warren (D-Mass.) this week sent letters to Wells Fargo and Early Warning Services—the parent company of the Zelle peer-to-peer payment platform—criticizing their response to her recent report on P2P fraud.
New Letter: Warren wrote in her letters that Zelle scams are disproportionately high at Wells Fargo and that the bank has not adequately responded to her previous requests for data on how it reimburses users who authorize fraudulent transactions on the platform.
Recent Report: After Warren last month issued a report calling on the Consumer Financial Protection Bureau to strengthen Regulation E to require banks to reimburse customers duped into authorizing payments to scammers, ICBA said regulatory restrictions are not the answer to addressing scammers who use P2P services.
ICBA Response: In a national news release on last month’s report, ICBA said:
Community banks are outraged by increasingly sophisticated fraud and follow strict electronic funds transfer regulations.
While more than 99.9% of Zelle transactions have no reports of scams, Zelle and the largest banks can take measures to improve consumer awareness and fraud protections.
Regulatory restrictions will never keep up with the pace of evolving fraud and will only disrupt banking services.
Unlimited liability for P2P fraud under Reg E would have a disproportionate impact on community banks.
Policymakers should focus more on combating fraud by working with P2P technology vendors to maximize consumer awareness and implement safeguards.
Background: The Reg E debate has grown amid the rising incidence of P2P fraud, with the CFPB expected to require banks to reimburse customers who authorized fraudulent transactions, which likely would raise legal challenges. ICBA will continue raising concerns with the CFPB’s potential expansion of Reg E to address the issue.