Electronic Fund Transfer Act Slated For Review

07/27/22

Due to recent media coverage surrounding an increase in P2P fraud, the CFPB and Chairwoman Maxine Waters (D-CA) have both said they plan to take a closer look at possible regulatory or legislative changes to the Act. The chairwoman has proposed legislation that may go to mark-up in the next couple of weeks. The proposed legislation would expand the instances when a bank would have to make a customer whole from the current rules, which only includes unauthorized transactions (your account hacked) to making them whole when the transaction was fraudulently induced (a customer falls for a scam) and the bill would also expand coverage to wire transfers. Additionally, a group of Democratic Senators called on the CFPB to push banks to shoulder more liability for fraud that occurs on payment platforms like Zelle. They argue that consumer protections around electronic payments need to be updated for the digital age. The letter was led by Chairman Sherrod Brown (D-OH) and five of his Democrat colleagues. Further, there are signs that the CFPB may take action very soon to unilaterally expand Reg E based on their interpretation. The OBL has been engaged with the Congressional delegation to oppose any expansion of Reg E, and to educate about the unintended consequence of such an expansion.