CoinDesk Reports:
According to reports, JPMorgan Chase, Bank of America, and Wells Fargo have agreed to testify in a U.S. Senate hearing regarding fraudulent activities totaling hundreds of millions of dollars on the payment network Zelle.
Politico, citing anonymous sources familiar with the plan, reported that executives involved in bank payment operations are expected to appear on July 23rd.
The hearing, to be conducted by the Permanent Subcommittee on Investigations, revealed that customers of the banking giants reported $456 million in fraudulent Zelle transactions in 2022, with banks refusing to reimburse $115 million in claims.
Democratic Senator and committee chairman Richard Blumenthal criticized the banks for failing to take adequate consumer protection measures.
“They have decided it’s just a cost of doing business. But it’s a cost to consumers, not to them, because consumers are paying for it out of their own pockets. That’s why we’ve invited Zelle and the three biggest banks to testify,” said Senator Blumenthal.
Blumenthal noted that banks are now “awakening” as fraudsters increasingly exploit technological advancements to target customers, utilizing AI voice cloning and selling extracted personal information from data breaches on the dark web, thereby escalating risks. He stressed the growing importance of safeguards.
“Zelle and its bank owners are aware of the alarming new trend. No doubt. They have been notified,” he added. “They track the specifics of the latest scams but have failed to stop them or make their customers whole.”
Zelle, owned by seven major U.S. banks including JPMorgan Chase, Bank of America, and Wells Fargo, reported processing $806 billion in transactions last year, with “less than one-tenth of a percent” reported as fraudulent or scams.
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