In full transparency, the following is a media release from Sen. Elizabeth Warren’s office. She was elected by voters in the Commonwealth of Massachusetts to serve the state in Washington DC in the US Senate. She is a Democrat. (stock photo)
WASHINGTON DC – U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Early Warning Services (EWS), the parent company of big bank-owned peer-to-peer payment platform Zelle, questioning EWS about upcoming changes to its fraud policy on Zelle, including changes to its liability policies and refunds for customers who were scammed, and requesting a full briefing about these changes.
“Your proposed policy changes are long overdue: consumers deserve better than EWS’ current approach, which leaves them holding the bag while scammers and fraudsters benefit. But given the consistent unwillingness of EWS and the Big Banks that own and operate the platform to cooperate or provide lawmakers and the public with full, complete, and factual information about fraud on Zelle, your announcement gives me little confidence that your company will implement the full scope of changes needed to protect consumers from fraud on Zelle,” wrote Senator Warren.
In October 2022, Senator Warren released a report that found rampant and increasing fraud and scams on Zelle – with the value of fraud and scams jumping more than 250% from over $90 million in 2020 to a pace exceeding $255 million in 2022.
The report also found that Zelle wasnot repaying consumers who were defrauded, leading to millions of lost funds for consumers each year. Less than half of the value (47%) of “unauthorized” transactions classified by EWS as fraud was returned to consumers in 2021 and the first half of 2022.
Recent reports indicate that EWS is considering changes to its fraud policy, including changes in liability for banks on the platform and increasing refunds for customers. Senator Warren is requesting EWS provide a briefing on its proposed rule change for Zelle no later than January 9, 2023, and included a set of questions that EWS should be prepared to answer, including its plans to implement this new rule retroactively, how EWS will work with regulators, and if EWS will commit to publicly release complete data on the scope of fraud and scams on Zelle.