Sen. Warren encourages increased oversight of Zelle following fraud cases

Zelle fraud oversight overview: 

• Who: Sen. Elizabeth Warren urged the Consumer Financial Protection Bureau to increase its oversight of digital payment network Zelle. 
• Why: Warren argues that an investigation she conducted found only 9% of consumers defrauded on Zelle were reimbursed and that cases of fraud on the platform are “rampant” and continuing to increase. 
• Where: Zelle is used by consumers nationwide. 

Sen. Elizabeth Warren urged the director of the Consumer Financial Protection Bureau (CFPB) to increase the agency’s oversight of digital payment network Zelle after reports of fraud. 

In a letter addressed Oct. 26, Warren also urged CFPB Director Rohit Chopra to improve its protections for consumers, whom she argues have been unfairly treated by banks that use Zelle, in the event that they become victims of fraudulent activity.

Warren argues an investigation she personally launched into the company revealed “rampant fraud” had been perpetrated on the platform and that banks who work with it failed to reimburse victims.

“Zelle is increasingly becoming a tool of bad actors who use the platform to defraud consumers, while the big banks that own Zelle do little to stop them or provide recourse to their consumers,” Warren writes. 

Claims Zelle fraud continue to rise, Warren claims

Warren claims Zelle fraud continues to rise, with the number of fraud and scam events reported by PNC Bank increasing from around 8,800 in 2020 to approximately 12,300 this year. 

U.S. Bank is also expected to report an increase in fraud and scam events, according to the letter, with the financial institution anticipated to report almost 45,000 claims of Zelle fraud, compared to around 14,900 in 2020. 

“The four banks that reported the relevant data received scam and fraud claims in excess of $90 million in 2020 and are on pace to receive scam and fraud claims in excess of $255 million in 2022,” Warren writes. 

Warren argues banks also fail to repay defrauded consumers, with datasets provided by the institutions reportedly showing only 9% of fraud cases result in compensation. 

Warren also called out Wells Fargo and JPMorgan for allegedly failing to provide her with datasets showing how many of their customers submitted fraud claims and how many were reimbursed. 

Consumers filed a number of class action lawsuits this year against a variety of financial institutions, including Bank of America, Capital One, Wells Fargo and Navy Federal Credit Union, over claims the banks don’t do enough to protect customers from Zelle fraud.

Have you been a victim of Zelle fraud? Let us know in the comments! 

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