America’s Credit Unions voices opposition to act aimed at consumer protection

Last week, Democrats in the House and Senate introduced legislation aimed at protecting victims of fraud by requiring financial institutions to reimburse customers who send ill-advised electronic fund payments.

Named S. 4943 The Protecting Consumers from Payment Scams Act, the legislation would amend the existing Electronic Fund Transfer Act (EFTA) and put financial institutions on the hook for reimbursing members/customers who fall victim to EFT scams. The full onus of such fraud wouldn’t fall solely on FIs, though. Payments would need to be split evenly between the credit union, for example, and the institution that received the fraudulent transfer.

Zelle was called out explicitly as being a means by which many Americans are defrauded. “Zelle’s speed and convenience have made it a target for bad actors looking to trick unsuspecting consumers out of their hard-earned money,” said Senator Richard Blumenthal (D-CT), who cosponsored the bill. “Despite this growing threat, Zelle and the banks that own it have failed to implement adequate safeguards and reimbursement policies to make consumers whole when they fall victim to scams and fraud. Our measure takes bold action where Zelle’s efforts at self-regulation have fallen short, ensuring that instant payments do not automatically result in instant losses for consumers.”

Senator Elizabeth Warren (D-MA) added that “Americans are sick and tired of these scams. Banks and peer-to-peer payment services like Zelle need to be held accountable for the scammers that are operating on their platforms.”

 

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