Joint Statement for the Record on "Instant Payments, Instant Losses: Zelle and the Big Banks Fail to Protect Consumers from Fraud"

Chairman Blumenthal, Ranking Member Johnson, and distinguished Members of the Committee, the American Bankers Association (ABA), the Bank Policy Institute (BPI); Consumer Bankers Association (CBA), and the National Bankers Association (NBA) (hereinafter, Associations) appreciate the opportunity to submit a statement for the record for the July 23, 2024, hearing: "Instant Payments, Instant Losses: Zelle and the Big Banks Fail to Protect Consumers from Fraud."

Introduction

From using breakthrough technologies such as generative artificial intelligence (AI) to old fashioned theft of checks out of mailboxes, criminals are relentless in their efforts to steal money from the bank accounts of consumers and small businesses. As outlined in our May 21, 2024 statement for the record, banks have a long history of improving and innovating to protect their customers, including the adoption of chip-enabled credit cards, the use of multi-factor authentication to protect user accounts, and the use of advanced AI tools to prevent and warn customers about potentially fraudulent transactions. Banks work tirelessly to identify and report suspicious accounts to law enforcement; to help educate and warn their customers about common scams, and to root out accounts that have been used by criminals. Banks, however, cannot win this fight on their own—it is going to take a cross-industry effort to stay ahead of fraudsters and scammers.

The activities of these criminals touch more than just the banking industry, and the efforts to counter frauds and scams must similarly be cross-industry. Each step in the scam ecosystem—from how a scammer identifies consumer targets, to how a scammer communicates instruction to a victim, to how the money is processed—offers an opportunity to stop the flow of funds to the criminal. Focusing on only one aspect or one step in the process will not stop this surge of scams. Rather, a holistic approach to address all the entities and elements of a scam has the best chance of being successful.

Banks are but one contributor to the overall safety and security of the payments ecosystem, and cannot single-handedly prevent criminals from defrauding consumers or financial institutions. Government must also play a role to protect the payments ecosystem. Banks are investing heavily in new technologies and capabilities to try to thwart criminals, and some hold great promise, but when customers are deceived into transferring their money to criminals or mailing packages containing checks or sensitive consumer information is stolen from a post office, there are limits to what banks can do to protect consumers.

Download the statement for the record to read the full text.