What Senator Warren wants

The report calls upon the Consumer Financial Protection Bureau (CFPB) to “act to clarify and strengthen” Regulation E, which outlines rules and procedures for electronic funds transfers (EFTs) and provides guidelines for issuers of electronic debit cards. It also says “to include fraud in the Regulation’s error resolution purview.”

Why banks think it’s unreasonable to tighten regulation

A statement on Warren’s Zelle report by American Bankers Association (ABA), Bank Policy Institute (BPI), Consumer Bankers Association (CBA) and The Clearing House, acknowledges that “like every other instant P2P payment service,” Zelle is not “entirely free from those who seek to defraud the American consumer.”

But expanding current liability framework for banks would hurt consumers choice, limiting “the instantaneous features or impose fees to recover their additional costs,” and it 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.”

The app meant to give Venmo a run for its money, isn’t even the worst of the lot. Major banks pointed to the prevalence of consumer fraud to being much greater on nonbank P2P providers, like Venmo, Paypal and Cash App, citing a recent BPI survey.

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