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Senators urge CFPB to expand Regulation E
A group of six Democrat Senators yesterday wrote to CFPB Director Rohit Chopra in response to recent media reports that the Bureau is considering issuing additional guidance to expand Regulation E, which would seek to ensure financial depository institutions cover losses from consumer transactions that are a result of scam, a direct expansion of the current regulation that requires depository institutions to cover losses for consumer transactions as they relate to fraud.
CFPB Wants Banks to Pay Back Victims Scammed Using Zelle, Other P2P Services
Victims of scams involving Zelle and other peer-to-peer (P2P) money transfer services could be getting new assistance from the Consumer Financial Protection Bureau (CFPB) by way of proposed increased requirements on banks.
With fraud and scams increasing at record levels in 2021, the U.S. Government stepped in with the CFPB releasing updates on electronic funds transfers, that clarified their position that more consumers needed to be reimbursed for scams. It marked the beginning of the end where financial institutions can hold consumers liable for all scams.
Regulation E sets forth the conditions in which consumers may be held liable for unauthorized transfers, and its commentary expressly states that negligence by the consumer cannot be used as the basis for imposing greater liability than is permissible under Regulation E. 12 CFR 1005.6; Comment 6(b)-2. For example, consumer behavior that may constitute negligence under state law, such as situations where the consumer wrote the PIN on a debit card or on a piece of paper kept with the card, does not affect the consumer's liability for unauthorized transfers under Regulation E. Comment 1005.6(b)-2.
Most Current Regulation
Electronic Fund Transfer Act (EFTA) and Regulation E FAQs