The left’s regulatory assault on our nation’s financial institutions took a major leap forward last week with House and Senate Democrats introducing the Protecting Consumers from Payment Scams Act, a bill they contend will protect consumers from fraud and scammers on P2P payment platforms such as Zelle and Venmo. The sad truth is this legislation is nothing more than a transparent political attack on American banks and fintech disguised as consumer protection.
The bill sprang to life just days after a Senate subcommittee completed yet another inquisition of our nation’s banks, where the cause and the cure for online payment scams were placed squarely at their feet. Senator Richard Blumenthal’s (D-CT) misleading and heavily biased opening statement shot accusations at Zelle as a hotbed of fraud and scams, despite publicly available data showing that fewer than 0.1% of Zelle transactions in 2023 were reported as fraud or scams.
Blumenthal’s distortion deliberately disregarded Zelle having already taken proactive steps to detect and prevent fraud while also compensating victims from a variety of online scams. Zelle has further implemented robust in-app alerts that are presented to users to complement the partnerships with the Better Business Bureau and the National Council on Aging to increase awareness about would-be scammers and their tactics. Zelle’s Scam and Fraud Elimination (S.A.F.E.) Squad educational campaign has also aimed to reach younger users who are—shockingly for digital natives—three times more likely to be ensnared in an online scam than older users, according to a Deloitte survey.
The Democrats’ assault on P2P payment platforms, Zelle especially, is troubling for a number of reasons. Zelle is the byproduct of groundbreaking innovation and technology developed to meet consumers’ demand for safe and secure digital payment options, which has been accomplished by routing transactions directly between banks and avoiding third parties. It is an entirely free service that generates no revenue for participating banks. Legislation that punishes innovation that generates greater safety and convenience for consumers will lead to less innovation at a time when expanding global banking services require it most.
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