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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.
The group of Senators, including Senate Banking Committee Chairman Sherrod Brown, D-Ohio, Jack Reed, D-RI, Robert Menendez, D-N.J., Elizabeth Warren, D-Mass., Catherine Cortez Mastro, D-Nev., and Raphael Warnock, D-Ga., noted that “determining liability based on whether a consumer or a fraudster physically initiates a transaction is antiquated,” and that the current rules around Regulation E were drafted prior to instant payment platforms, such as Zelle and Venmo.
Encouraging Chopra to implement new guidance, the group asserted that instant payment platforms have not done enough to protect against scam or fraud, leaving consumers with no recourse.
Of note, the group provided recommendations for the CFPB to expand the current status of Regulation E stating, “a more effective approach would be for the CFPB to expand banks’ liability to encompass a far greater set of fraudulent transactions.” The group promoted a direct expansion of depository institutions’ liability for scams and other consumer-initiated fraudulent transactions.
“Given the growing marketing and use of these services, we believe it is essential that the CFPB intervene to protect consumers by more vigorously applying its existing authority under the EFTA and Regulation E, and we are pleased by reports that the agency is considering some of these actions,” concluded the group.
NAFCU will continue to monitor the CFPB’s actions around Regulation E as such changes would directly impact all credit unions. NAFCU will keep members up to date on movement around this issue via NAFCU Today.