Sen. Blumenthal says financial institutions must take responsibility for Zelle fraud

Financial institutions must assume more responsibility for helping people who are defrauded by Zelle and other peer-to-peer payment systems, Sen. Richard Blumenthal, D-Conn., chairman of the Homeland Security and Governmental Affairs Permanent Investigations Subcommittee said Tuesday.

“The banks of America have a dirty little secret,” he said, as he opened a hearing focusing on Zelle and allegations of fraud. Zelle and the financial institutions that participate in the Zelle Network contend that there is little they can do when someone is a victim of fraud.

“By the time a consumer knows that they’ve been scammed, it’s too late to do anything about it,” Blumenthal said.

Zelle, the largest peer-to-peer payment service, is owned by the nation’s largest banks but it is used by credit unions, community banks and minority depository institutions. In a letter to the subcommittee, Jim Nussle, president/CEO of America’s Credit Unions pointed out that those institutions comprise more than 95% of the financial institutions that participate in the Zelle Network.

 

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