Sen. Elizabeth Warren, D-MA, called the peer-to-peer payments network “unsafe,” claiming Zelle users were defrauded out of $500 million last year.
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Bank CEOs Defend P2P Payments Network Zelle in Senate Hearing Over Consumer Fraud Handling
BankingDive | Anna Hrushka | Sep 23, 2022
Sen. Elizabeth Warren, D-MA, called the peer-to-peer payments network “unsafe,” claiming Zelle users were defrauded out of $500 million last year.
“You have created a perfect weapon for criminals to use and they have used it and you have not stood behind your customers,” she told the witnesses, which included the CEOs of JPMorgan Chase, Bank of America, Wells Fargo, Citi, Truist, PNC and U.S. Bank.
- Zelle, a network designed to compete with P2P fintechs such as Venmo and Cash App, is owned by six of the seven banks represented at Thursday’s Senate Banking Committee hearing.
- Senate Democrats on Thursday pressed the CEOs of the nation’s largest retail banks to answer for scams associated with Zelle, a bank-owned peer-to-peer payments network, calling for the institutions to implement policies to protect and redress customers defrauded through the platform.
See:
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Some New Banking Rules Implemented to Protect Consumers in Canada
- In a joint letter sent to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra in April, the Democratic lawmakers called on the regulator to expand the definition of “error payments” to include payments a consumer makes to a scam artist. The lawmakers also called for the CFPB to issue guidance that would place the burden on banks to make consumers defrauded by such transactions whole.
- JPMorgan CEO Jamie Dimon, who is no stranger to fiery exchanges with Warren, said his bank reimburses customers whose accounts have been hacked, a policy banks follow under Regulation E. Anything that’s unauthorized, we do cover,” Dimon told the senator, adding the amount of fraud on Zelle is “relatively small.”
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