Zelle, a banking platform of fraud and scam, reveals a report of the American Senator, Elizabeth Warren (D-Mass.)

CTN News


In a statement from the Office of U.S. Senator Elizabeth Warren (D-Mass.), a copy of which reached ZoomHaitiNews Editorial Office on Thursday, October 27, 2022, the congresswoman informs that she has sent a letter to the Consumer Financial Protection Bureau (CFPB) in the United States, which summarizes the findings of her investigation conducted on the platform <<Peer-to-Peer Zelle>> belonging to Banks, and revealing numerous cases of fraud and scams that have been listed.

In the said document, Senator Warren states that she finds high rates of fraud and scams on the peer-to-peer platform Zelle. And what is most surprising is that not only is fraudulent activity growing on the platform, but banks are not refunding the vast majority of defrauded consumers, thus breaking their promises to their customers and potentially violating federal law. As a result, several banking institutions are then subject to legal action.

“My investigation, which is based on non-public information obtained from the banks that own and operate the platform, shows that Zelle is increasingly becoming a tool for bad actors to use the platform to scam consumers, while the major banks that own Zelle are doing little to stop them or provide recourse to their consumers,” the release reads.

Also important to the report, Senator Warren concludes that she has uncovered new data revealing that these banks are not refunding customers who dispute “unauthorized” Zelle payments, a potential violation of federal law and CFPB rules. In addition, the banks are not reimbursing the vast majority of cases where customers have been defrauded into making payments on Zelle.

The document also mentions the obligations of the institutions in connection with the development of transaction (payment) platforms. The CFPB has regulatory authority over peer-to-peer platforms like Zelle, and is reportedly considering issuing guidance clarifying the scope of “Regulation E.” The agency should act to clarify and strengthen “Regulation E,” and to include fraud within the scope of regulatory error resolution, the release continued.

Senator Warren added, “As the CFPB considers action on this issue, the results of my investigation reveal that the agency must strengthen consumer protections on peer-to-peer platforms like Zelle.” “The increasing volume of fraud and scams – combined with banks’ failure to compensate consumers in more than 90 percent of authorized scams and nearly 50 percent of unauthorized scams – is a violation of banks’ responsibilities to their consumers and is not consistent with the goals of Regulation E.”
This suggests that several banking institutions in the U.S. and elsewhere are therefore not exempt from prosecution by Justice.

It is worth noting that over the past six months, Senators Warren, Bob Menendez (D-N.J.) and Jack Reed (D-R.I.) have sent oversight letters requesting information about fraudulent transactions on Zelle. In April 2022, Senator Warren sent a letter to Early Warning Services requesting the company disclose the number of fraud reports it had received from users since the beginning of 2018. Early Warning Services provided little data on the volume of fraudulent transactions occurring on Zelle. In July 2022, Senators Warren, Menendez, and Reed subsequently sent letters to each of the banks that own Zelle’s parent company requesting information about the Zelle scams and frauds its customers reported to them. With the exception of Truist, the affected banks that testified provided little or no information requested by lawmakers, until Senators Warren and Menendez again pressed bank CEOs for the information at the September hearing on banking, housing and urban affairs in Uncle Sam.

This will cause a lot of turmoil among consumers, until the US Congress can decide on this case, which casts doubt on the reliability of the Zelle platform, which generates more than a million users worldwide.

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