Sens. Brown, Reed urge big banks to better protect consumers from wire fraud

U.S. Sens. Sherrod Brown (D-OH) and Jack Reed (D-RI) are urging the nation’s four largest banks to protect consumers from wire fraud.

In a letter to the CEOs of JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup, the senators asked them to provide data on wire fraud at their banks and information about their current policies to protect consumers from financial devastation.

“Consumers use wire transfers to send large dollar amounts, often to purchase a home or make significant investments, meaning wire fraud is often a life-changing event that can wipe out consumers’ savings or irreparably damage their finances,” the senators wrote in the letter. “Banks have a responsibility to proactively monitor and prevent unauthorized and fraudulently induced transactions. We believe banks should reimburse their customers when they fail to meet these obligations…. With improved fraud prevention and reimbursement practices, consumers would no longer be left on the hook to the tune of billions of dollars annually.”

Consumers lost more than $10 billion due to fraud in 2023, the senators said — up 14 percent from the year before. The Federal Trade Commission said “bank transfer or payment” is the largest payment method used by fraudsters. The fraud and scams are often perpetrated on digital payment transfer apps, like Zelle, Venmo, and CashApp.

Reed has pushed for new rules that would impose more liability on banks when consumers are tricked into sending money on these apps. He has also called for federal banking agencies to more closely supervise banks that participate in instant payment app networks to ensure their anti-money laundering (AML) controls are adequate.

Reed, Brown, and U.S. Sen. Elizabeth Warren (D-MA) offered their support for the Consumer Financial Protection Bureau’s (CFPB) proposed new rule that would expand oversight and supervisory authority over tech companies that offer digital peer-to-peer mobile payment systems and digital wallet services.

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