WASHINGTON—Following recent media reports that the CFPB is considering issuing additional guidance to expand Regulation E in the wake of scams, six senators have sent a letter to Director Rohit Chopra calling for action and suggesting financial institutions bear more responsibility.
The CFPB has said the move is designed to ensure depository institutions cover losses from consumer transactions that are a result of scam, which would be an direct expansion of the current regulation that requires depository institutions to cover losses for consumer transactions as they relate to fraud.
As CUToday.info has reported, some consumers filed potential class action lawsuits against financial institutions after they were defrauded, including a suit against Navy FCU related to a member who was victimized by a scam on Zelle.
‘Antiquated’ Methodology
The group of senators, including Senate Banking Committee Chairman Sherrod Brown (D-OH), Jack Reed (D-RI), Robert Menendez (D-NJ), Elizabeth Warren, D (MA)., Catherine Cortez Mastro (D-NV) and Raphael Warnock (D-GA), noted that “determining liability based on whether a consumer or a fraudster physically initiates a transaction is antiquated,” and that the current rules around Regulation E were drafted prior to instant payment platforms, such as Zelle and Venmo.
The senators are calling on Chopra to implement new guidance, asserting that instant payment platforms have not done enough to protect against scam or fraud, leaving consumers with no recourse, NAFCU reported.
Of note, the letter offers recommendations for the CFPB to expand the current status of Regulation E stating, “a more effective approach would be for the CFPB to expand banks’ liability to encompass a far greater set of fraudulent transactions.”
Liability for FIs
The legislators promoted a direct expansion of depository institutions’ liability for scams and other consumer-initiated fraudulent transactions, NAFCU noted.
“Given the growing marketing and use of these services, we believe it is essential that the CFPB intervene to protect consumers by more vigorously applying its existing authority under the EFTA and Regulation E, and we are pleased by reports that the agency is considering some of these actions,” concluded the group.
The Very Best in CU Reporting. For You. For Free. Or a Full Refund.
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.