The American Bankers Association has sent a letter to CFPB Director Chopra in which it urges the CFPB not to shift liability to banks for peer to peer (P2P) payments using an online-money transfer platform in which the consumer who authorized the payment subsequently claims it was made to a scammer.
The ABA sent its letter as a follow up to a meeting it attended with CFPB staff to discuss financial scams involving P2P payments. It references recent reports that the CFPB is considering issuing new guidance that would require banks to make refunds to victims of scammers who defraud consumers into sending money to a third party using an online money-transfer platform. Under the Electronic Fund Transfer Act (EFTA) and Regulation E, an unauthorized electronic fund transfer (EFT) is an EFT from a consumer’s account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit. The existing Official Staff Commentary specifically states that an unauthorized EFT includes a transfer initiated by a person who obtained the access device from the consumer through fraud or robbery, stopping well short of covering transactions initiated by the consumer as the result of fraud.
Under the EFTA and Regulation E, consumers who provide a bank with timely notice of an error that the bank determines to be an unauthorized EFT are entitled to EFTA/Regulation E liability protection. If the CFPB were to…
