On October 3, the United States Senate published a report revealing that rampant fraud and theft had been occurring on the popular digital payments network Zelle and was continuing to increase. And with the banks that jointly own the service blatantly refusing thus far to compensate customers impacted by these thousands of scams, concern is growing over whether financial regulatory frameworks are sufficiently robust in the world of online instant payments.
The Senate Committee on Banking, Housing, and Urban Affairs (BHUA) published the report following the opening of an investigation into Zelle and its owner and operator, Early Warning Services (EWS), by Senator Elizabeth Warren in April 2022; several key reports—most notably from the New York Times—had found that bad actors prolifically used the platform to defraud customers by abusing its instantaneous, easy-to-exploit transfer system. The report also detailed Warren’s findings of the fraud data provided by the consortium of banks that own and operate Zelle and EWS—Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank and Wells Fargo—and jointly set up the company five years ago.