The use of peer-to-peer payment apps like Zelle and Venmo has become increasingly popular for consumers looking for quick and convenient ways to transfer money electronically. However, recent reports have highlighted the vulnerabilities that users face when it comes to fraud and scams while using these platforms.
In 2023, consumers reported losing $210 million to scams across all payment apps, according to data from the Federal Trade Commission. Fraudsters often use tactics like email phishing or posing as bank employees to deceive users into sending money through these apps.
To address these concerns, a new bill introduced by Democrats in Congress aims to increase reimbursement protections for consumers who fall victim to fraud while using payment apps. The Protecting Consumers from Payment Scams Act, proposed by Rep. Maxine Waters, Sen. Richard Blumenthal, and Sen. Elizabeth Warren, seeks to hold financial institutions more accountable for helping consumers resolve instances of fraud disputes.
The bill would update the 1978 Electronic Fund Transfer Act to require financial institutions to share liability for fraudulent transactions and clarify consumer protections for electronic money transfers. This comes after a Senate investigation found that major banks like JPMorgan, Bank of America, and Wells Fargo reimbursed consumers for only 38% of fraud disputes in 2023, leaving over $100 million unreimbursed.
As scrutiny of payment apps like Zelle continues to grow, lawmakers are calling for more transparency and accountability from financial institutions to protect consumers from potential financial losses. It remains to be seen how the proposed bill will be received and whether it will lead to significant changes in the way fraud disputes are handled in the future.