Banking groups are taking issue with a report by Senator Elizabeth Warren (D-MA) regarding the prevalence of fraud on Zelle, the popular peer-to-peer (P2P) payment service. In an October 3 joint statement, the Consumer Bankers Association, American Bankers Association, Bank Policy Institute, and The Clearing House expressed their collective disagreement with the report’s conclusions that fraud and theft are rampant and growing on the platform, banks are not refunding when customers were fraudulently induced into making payments, and that the Consumer Financial Protection Bureau should increase its supervisory oversight of the platform.

“Today’s report from Sen. Warren fails to acknowledge that 99.9% of the 5 billion transactions processed on the Zelle network in the past 5 years were sent without any report of fraud or scams. Zelle has soared in popularity with bank customers because it’s fast, free and easy to use. Customers also take comfort in knowing that Zelle transactions are provided by and through their trusted bank.”

While acknowledging that the platform is not entirely free of fraudsters, the statement offers assurance that banks are taking the appropriate steps to warn its customers of common schemes and suspicious activity. Additionally, the banking groups point out that banks are already obligated under federal law to investigate every instance in which a customer disputes a transaction made via Zelle and provide reimbursement if the transaction was unauthorized.

With these protections already in place, the banking groups are pushing back against the suggestion that additional regulation is needed. “Expanding the current liability framework for banks, as the report suggests, would force Zelle providers to either scale back Zelle’s popular instant P2P services given the financial risk, possibly limit the instantaneous features or impose fees to recover their additional costs. Either way, consumers’ access to these valued services would be limited, forcing them to meet their needs outside the well-regulated banking system. Further, a change in the current framework would have a chilling and disproportionate impact on community banks, and all small financial institutions, and some would be unable to offer P2P payment services altogether given the potential for unlimited liability.”