Association Opposes Bill Shifting Fraud Costs to Financial Institutions

Both chambers of Congress have introduced bills to amend the Electronic Fund Transfer Act to require financial institutions to reimburse consumers defrauded into initiating electronic fund transfers. The proposed legislation mandates shared liability between the consumer's financial institution and the institution that receives the fraudulent transfer.

In a press release, bill sponsors in the Senate singled out Zelle, saying the peer-to-peer payment network's "efforts at self-regulation have fallen short." According to America's Credit Unions, over 95 percent of the 2,100 financial institutions participating in the Zelle network are credit unions and community banks, including many minority depository institutions and community development financial institutions. The Association asserts that shifting the burden of fraud losses onto credit unions would significantly limit their ability to offer their members Zelle and other popular digital payment platforms.

In a letter to Senate Finance Committee member Sen. Chris Van Hollen, the MD|DC Credit Union Association expressed its opposition to the Protecting Consumers from Payment Scams Act of 2024 (S. 4943) stating:

"…while we appreciate the Committee's focus on addressing fraud and scams related to peer-to-peer services, we urge consideration of broader solutions that tackle the root causes of fraud. This includes enhancing financial education, increasing resources for law enforcement, and addressing the ease with which scammers can conceal their identities and deceive consumers."

The Association urged lawmakers to focus on preventing fraud before it occurs.