Senator Elizabeth Warren, D-Mass, is calling for U.S. consumer finance regulators to beef up their oversight of Zelle.
Specifically, Warren wants the Consumer Financial Protection Bureau to make banks pay more customers defrauded on Zelle, as the Massachusetts Democrat wrote in a letter to the CFPB.
The letter focuses on an investigation Warren’s office has been conducting into Zelle, a platform that many of the largest U.S. banks use to facilitate peer-to-peer payments among their account holders.
Warren’s findings say the CFPB “must update and strengthen regulations governing the obligations of banks to repay customers who are defrauded on Zelle and other peer-to-peer payment platforms.” Warren was instrumental in creating the CFPB as part of the 2010 Dodd-Frank Act prior to her time in the Senate.
Zelle was the subject of a heated exchange between the Senate Banking Committee and the CEOs of several banks behind it in July. A core dispute is the nature of the frauds at play, with the banks saying they reimburse customers who did not make the payments from their accounts. Banks don’t reimburse customers who are themselves tricked into sending money.
But the CFPB is under fire following a Fifth District Court ruling last week saying that its funding mechanism — direct from the Federal Reserve rather than standard appropriations — is unconstitutional.