Joint Statement for the Record: "Fraud Alert: Shedding Light on Zelle"

Chairman Blumenthal, Ranking Member Johnson, and distinguished Members of the Committee, the American Bankers Association (ABA), the Bank Policy Institute (BPI); Consumer Bankers Association (CBA), and the National Bankers Association (NBA) (hereinafter, Associations) appreciate the opportunity to submit a statement for the record for the May 21, 2024, hearing: "Fraud Alert: Shedding Light on Zelle."

Introduction

From using breakthrough technologies such as generative artificial intelligence (AI) to old fashioned theft of checks out of mailboxes, criminals are relentless in their efforts to steal money from the bank accounts of consumers and small businesses. Banks have a long history of improving and innovating to protect their customers, including the adoption of chip-enabled credit cards, the use of multi-factor authentication to protect user accounts, and the use of advanced AI tools to warn customers about potentially fraudulent transactions. Banks, however, cannot win this fight on their own– it is going to take a cross-industry effort to stay ahead of fraudsters and scammers.

The activities of these criminals touch more than just the banking industry, and the efforts to counter frauds and scams must similarly be cross-industry. Each step in the scam ecosystem—from how a scammer identifies consumer targets to how the money is processed—offers an opportunity to stop the flow of funds to the criminal. Focusing on only one aspect or one step in the process will not stop this surge of scams. Rather, a holistic approach to address all the entities and elements of a scam has the best chance of being successful. Banks work tirelessly to identify and report suspicious accounts to law enforcement; to help educate and warn their customers about common scams, and to root out accounts that have been used by criminals.

Consumers are on the front lines of this fight, and banks work diligently to ensure they have the tools and knowledge they need to protect themselves. Many banks have significantly increased their education of customers. For example, many provide tips for spotting scams where they can best reach their customer, whether in a physical branch, in customer communications, and on their websites, and provide warnings to customers not to share passcodes or send money to people they do not know.

The ABA launched #BanksNeverAskThat, an anti-phishing campaign. Since its launch in October 2020, ABA and member banks have helped educate millions of consumers on how to spot common scams from bad actors posing as their bank. An updated version of the successful campaign will launch in the fall of 2024 and be available to all banks.

However, while banks can educate consumers and help keep customers’ accounts secure, these controls can be defeated if a criminal convinces the customer to let them into the customer’s account or to send them money. Ultimately, banks have little power to stop customers from withdrawing their own money, and indeed victims often are coached to ignore the bank employees who warn them not to withdraw or send the money. We encourage other trusted sources, such as government actors and nonprofits, to partner with us to amplify the important work banks are doing to educate consumers on fraud.

But even these measures alone will not stop scammers. While banks have technology and infrastructure in place to help defend themselves and their customers, they can only provide the leads necessary for law enforcement to track down the perpetrators. It is critical that federal telecommunications regulators take steps to prevent criminals from “spoofing” legitimate names and phone numbers to impersonate banks. Moreover, telecommunications companies must pursue meaningful initiatives in conjunction with their regulators to counter the rising threat of fraud and scams.

Download the Statement for the Record to read the full text.