On February 15, Senators Sherrod Brown (D-OH), Jack Reed (D-RI) and Elizabeth Warren (D-MA) sent a letter to Zelle seeking clarification of its reimbursement policy for victims of imposter scams. Calling its protocol for reporting fraud and scams “unnecessarily complicated,” the Senators asked Zelle to add more categories of scams for which users can be reimbursed, and to streamline its process for reporting fraud, scams, and unauthorized transactions. The Senators noted that Zelle’s policy did not make clear which types of scams would qualify for reimbursement or what steps consumers needed to take to exercise their rights under Zelle’s policy. The Senator’s pressed Zelle to make public whether banks and credit unions are required to reimburse customers who are victims of qualifying imposter scams. The Senators asked for responses to their questions by March 13, 2024.

Putting it into Practice: Peer-to-peer payment providers have been under pressure by the CFPB and Congress to do more to combat fraud. Generally speaking, these companies would only face liability under EFTA/Regulation E for transactions that are unauthorized. The staff commentary to Regulation E states that an unauthorized transaction includes a transfer initiated by a person who obtained the access device from the consumer through fraud or robbery. But this interpretation stops short of covering transactions initiated by the consumer who were tricked by fraudsters, which are the “imposter scams” underlying the Senators’ inquiry. The CFPB is reportedly working on guidance on how financial institutions are to treat such scams. They have yet to do so, and instead have been pressuring companies to combat the fraud themselves.