NEW JERSEY – U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Banking, Housing, and Urban Affairs Committee, joined Tuesday with advocates and victims in reiterating his call to the big banks who own Zelle and the Consumer Financial Protection Bureau (CFPB) to do more to protect consumers from fraud and scams conducted using instant digital payment networks like Zelle.
The senator recently called on the CFPB to hold banks accountable by updating and clarifying its rules and guidance for peer-to-peer payments regarding fraudulently induced transactions.
“The big banks are racking up billions of dollars in profits every year and all we are asking is that they treat their consumers fairly – that means taking proactive streps to prevent fraud and scams on their platform and then making it right when fraudsters or scammers slip through the cracks,” Menendez said. “It is time for the banks to revise their existing policies, end the confusion, and make consumers whole when they are defrauded on the banks’ own platform. We also need the CFPB to take swift action on Zelle-related scams.”
Nearly 18 million Americans were victims of scams involving Zelle and other instant payment applications in 2020 and the institutions that participate in the network do not appear to have provided sufficient protection or recourse to their customers for fraudulently induced transactions. Over the past several months, Sen. Menendez and several of his colleagues have led efforts to hold Zelle’s network operator, Early Warning Services LLC., and the seven banks that own it accountable, including Bank of America, Capital One, Chase, PNC Bank, Truist, U.S. Bank, and Wells Fargo.
“Rising inflation. the COVID 19 pandemic and other economic challenges have left low-and moderate-income New Jerseyans much less resilient when they fall victim to financial scams and fraud,” said Beverly Brown Ruggia, Financial Program Director for New Jersey Citizen Action. “The banks that own Zelle, who have made huge profits in recent years, have an obligation to implement robust measures to protect consumers using their digital payment networks. We applaud Senator Menendez for his leadership in pressing these banks, his fellow members of Congress and the Consumer Financial Protection Bureau to take action on this issue, and for his efforts to hold financial institutions accountable for the millions of scams that have been perpetrated through their networks. We urge lawmakers and officials at every level to take whatever actions needed to protect consumers from these online predators.”
New Jersey residents who were victims of Zelle scams joined the Senator and New Jersey Citizen Action to share their stories. Alex Carrazana, of Westwood, recounted how he was scammed out of nearly $600 in a Zelle scam when trying to purchase Buffalo Bills tickets for his son and a friend who had lost his dad to COVID-19. Mary Powell, of East Orange, shared how she was scammed out of $3500 by a professional scammer who had told her he would help her refund an unauthorized Amazon purchase. Neither of their banks assisted with refunding their stolen funds.
Sen. Menendez has been one of the three leading voices in the Senate fighting to protect consumers from Zelle scams. First in April and then again in July, Sen. Menendez led letters to Zelle’s parent company and the banks that own it – including J.P. Morgan, Chase & Co., Bank of America, and Wells Fargo – pressing them for do more to protect consumers from fraud and scams on Zelle.
Also in July, Sen. Menendez led Senate colleagues in urging the CFPB to do more to protect consumers and hold banks accountable for fraud conducted using bank-owned instant digital payment networks like Zelle. The senators called on the agency to update and clarify its rules and guidance for peer-to-peer payments regarding fraudulently induced transactions.
Sen. Menendez has been a leader in the fight to hold the financial industry accountable. In addition to his record on issues with Zelle, the Senator last month pressed big bank CEOs to eliminate overdraft fees which are negatively impacting working families. Sen. Menendez has also long led the charge in the Senate for consumer protections – ranging from banks, data breach protections for consumers, to cyber security, and more.
In 2014, Sen. Menendez crafted legislation following the monumental Target data breach in 2013, where he called on the Federal Trade Commission (FTC) to protect American consumers.