On November 13, Consumer Financial Protection Bureau Director Richard Cordray delivered prepared remarks regarding electronic funds transfers (EFTs). Although Cordray noted the benefits of EFTs to consumers, he cautioned that the potential for abuse necessitates aggressive policing of the industry.
According to the CFPB, the nationwide system for EFTs allows consumers to receive their paychecks, get their Social Security Benefits, and pay bills electronically, among other things. But the system can also be misused to victimize consumers, according to Cordray. For that reason, Cordray noted that the system’s safeguards must be enforced vigorously.
Cordray highlighted a number of perceived weaknesses in the system for EFTs. For example, EFTs typically require the sharing of routing information and sensitive bank account details. According to Cordray, this allows access to consumers’ accounts and opens the door to unauthorized collection efforts.
Cordray called on financial institutions to better protect consumers from unauthorized account transfers. Measures suggested by Cordray included greater responsiveness to stop payment and revocation orders, seamlessly processing requests to close accounts, and refunding fees that resulted from unauthorized transfers.
Although Cordray’s remarks called on financial institutions to self-regulate, his comments indicate that EFTs are clearly an area on the CFPB’s enforcement radar.