In a letter to the banks that own Zelle, U.S. Sens. Elizabeth Warren (D-MA) and Richard Blumenthal (D-CT), and U.S. Rep. Maxine Waters, (D-CA) called on banks to answer questions about the fraud from peer-to-peer transactions originating on social media.
The letter follows a decision by JP Morgan Chase to suspend all Zelle transactions originating on social media. The letter was sent Wells Fargo, US Bank, Truist, PNC, Bank of America, Capital One and separately to JP Morgan Chase. The law makers asked banks to explain what they are doing to track and stop social media scams that hurt millions of Americans on peer-to-peer (P2P) payment platforms, like Zelle.
“Zelle is a P2P payment platform associated with significant scams and fraud … CFPB’s lawsuit alleged that Zelle and its owners did not equip the platform with appropriate safeguards against fraud and systematically denied relief to consumers who were the victims of fraud, leading to more than $870 million in losses for hundreds of thousands of consumers,” the lawmakers wrote. “JPMorgan Chase’s decision to block Zelle transactions originating on social media comes as transaction volumes on the platform are exploding. And as JPMorgan Chase confirmed: the bulk of those scams are starting on social media. The Federal Trade Commission (FTC) has said the same: ‘more money was reported lost to fraud originating on social media than by any other method of contact.’”
The law makers said JP Morgan’s decision comes as the Trump administration works to dismantle federal efforts to protect consumers from P2P scams and fraud.
The letter asks banks to provide them with the percentage of Zelle scams that are reported to them that originate from social media platforms, copies of their consumer reimbursement policies when fraud is reported and what additional steps banks are taking to protect consumers from scams originating on social media by July 16.