The Honorable Rohit Chopra
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington DC 20552
Dear Director Chopra,
The American Bankers Association (ABA) and two community bankers, John Moniak of Bank of Deerfield and David Long of Bryant Bank, were pleased to attend the "listening session" on September 29 with staff of the Consumer Financial Protection Bureau (CFPB) to discuss financial scams involving peer to peer (P2P) payments. We are following up with this letter as the time and format constraints of the listening session did not allow participants to fully discuss some of the scams banks and their customers are experiencing, steps banks take to prevent scams and other fraud, and the significant banking industry efforts to educate customers about how to avoid being a victim of fraud. In addition, we want to reiterate and supplement our members' concern about the implications and unintended consequences if liability for payments that consumers authorize—but later claim were part of a scam—is shifted to banks.
P2P services are highly popular and beneficial to consumers. Fraud is de minimis relative to the transaction volume, with 99.9 percent of the 5 billion Zelle transactions processed in the past 5 years without issue.
P2P payment volume and popularity have soared in recent years and for good reasons. They are a convenient, fast, and (currently) usually free way to send money to people a consumer knows and trusts, especially when compared to cash and checks—the only other practical alternatives for consumer to consumer payments. P2P payments make it easy to pay the babysitter, lawn mower, or handyman, to send money to a college student, or to repay a friend for dinner or concert tickets without having to worry about having cash or locating a checkbook.
Consumers value the fact that P2P payments are made quickly—and importantly—cannot be reversed. Sellers who accept a P2P payment do not have to worry that a buyer will cancel the payment after the seller has handed over the item being sold. The finality of payment means recipients can confidently use the money as soon as it is received without fear it may be returned. P2P recipients do not have to monitor when the payment is available to spend as it is available immediately and cannot be returned and the account debited, which may cause an overdraft.
Consumers also benefit from the safety of P2P payments. While rarely reported by the media, check theft from the U.S. Postal Service has increased significantly in recent years, and cash can be stolen. P2P payments allows consumers to avoid this harm and inconvenience. Disputes and complaints about P2P payments are uncommon, especially for Zelle payments when compared to nonbank P2P products. As noted, 99.9 percent of the 5 billion Zelle transactions processed in the past 5 years were sent without any report of fraud or scams. The share of disputed transactions made using PayPal is three times higher than Zelle. For Cash App, it is six times higher. Similarly, a search of 2,954,837 consumer complaints reported on the Bureau's Consumer Complaint Database show there were:
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