Senator Warren Urges CFPB Action Against "Rampant Fraud" on Zelle Payment Platform

Senator Elizabeth Warren (D-MA) urged the CFPB to take action against the "rampant fraud" on the peer-to-peer instant payment platform Zelle. She also wants the agency to address the failure of the banks invested in Zelle to repay customers that were victims of fraud.

In a letter to CFPB Director Rohit Chopra, Senator Warren recommended that the CFPB amend Rule 1005 ("Regulation E — Electronic Fund Transfers") to strengthen consumer protections on peer-to-peer instant payment platforms.

Senators Warren, Menendez (D-NJ) and Reed (D-RI) opened an investigation into Zelle in April 2022 due to reports that it was the preferred payment service for fraudsters. The investigation found that (i) cases of fraud and scams have increased year over year, and (ii) the majority of banks that utilize Zelle's services do not repay customers in instances where customers were tricked into making payments to a fraudulent recipient or where bad actors obtained access to a customer's account and made unauthorized payments. Senator Warren said that most banks have cooperated with the investigation, while some refuse to provide data about instances of fraud.

Senator Warren said that failure to protect consumers is a violation of banks' obligations to their customers and goes against the directive of Regulation E.