HARTFORD, Conn. — After years of hearings and investigations, U.S. Sen. Richard Blumenthal (D-CT) introduced a new bill to protect consumers from scams through payment apps.
This includes Zelle, which Blumenthal says is enabling financial fraud.
“Zelle has become a mecca for con artists and scammers,” he said Friday. “We want to hold Zelle and the banks that own it accountable for reimbursing losses by innocent customer money out of their accounts.”
Zelle and similar companies make instantaneous and irreversible payments, as easy as a few clicks on your phone, but Blumenthal says payment fraud is on the rise.
According to the Federal Trade Commission, from 2021 to 2023, the amount of money consumers reportedly lost through payment app scams increased by more than 62%, with fraud surging by nearly 150%.
In 2023, the FTC received 2.6 million fraud complaints, with reported losses of $10 billion, which experts say significantly underrepresents the actual losses as fraud is typically underreported.
“All too often, the victims obtain no reimbursement whatsoever, no refunds back,” Blumenthal said. “Zelle should be responsible for stopping and preventing these con artists from exploiting the instantaneous irreversible transfers that take place.”
That’s why he and two other lawmakers introduced the “Protecting Consumers From Payment Scams Act.”
This bill would close loopholes and clarify the existing Electronic Fund Transfer Act by protecting consumers from liability if they are defrauded.
It would also require a consumer’s financial institution and the financial institution that receives fraudulent funds to share liability and protect people if they don’t receive goods or services purchased.
“Our legislation broadens the legal protection to provide more safeguards and more reimbursement to consumers when they are the victims of innocent fraud that Zelle has the power to stop,” added Blumenthal.
The other two other legislators co-sponsoring this bill with Blumenthal are Congresswoman Maxine Waters of California and Sen. Elizabeth Warren from Massachusetts.
They say 49 consumer advocates, experts and other stakeholders have already endorsed this bill.
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Emma Wulfhorst is a political reporter for FOX61 News. She can be reached at ewulfhorst@fox61.com. Follow her on Facebook, X and Instagram.
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