Summary:
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Policy Debate: A US Senate committee is debating whether peer-to-peer (P2P) payment services like Venmo and Zelle should be treated like cash or bank-payment channels. The distinction affects liability and consumer protections in cases of fraud and scams.
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Consumer Impact: Last year, customers of the largest lenders lost $370 million via Zelle, but only $100 million was reimbursed. While banks must reimburse unauthorized transfers under the Electronic Fund Transfer Act, scams where users are tricked into authorizing payments often leave consumers unprotected.
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Potential Changes: The Senate subcommittee recommends extending credit and debit card protections to P2P payments and amending laws to require reimbursement for fraudulently induced transactions. Similar rules are set to take effect in the UK. US bankers warn that increased protections could lead to unintended consequences, potentially ending the no-cost model of P2P payments.
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