scammed by the service. this is about two hours. [inaudible] thank you to make cochairman of the subcommittee the permanent subcommittee on investigations we work together on a bipartisan basis. very pleased to welcome you to

this hearing. on investigation entitled stirring on fraud alert shedding light. i'll give an opening statement to be followed by ranking member. the banks of america have a dirty little secret. it is called zelle it's not just to sell its other paid platforms, apps that people used to transfer money among their bank accounts. the cell is nearly instantaneous. almost always irreversible and it is owned by banks. in fact, zelle is the largest. too. payment app it is operated early warning services which in turn is owned and operated by the

seven largest banks for it zelle is often integrated into consumer's existing online bank accounts and mobile apps. zelle markets itself as a fast and easy way to send and receive money. unquote. as this committee has been found, a fast and easy way to lose money is often what happens on zelle. that is probably a more accurate catchphrase for zelle and other p2p platforms as well what distinguishes is speed permanence and bank ownership. that is really the reason we are focusing on zelle. the other platforms deserve attention as well. in fact it is less well known other payment apps like cash cap and then mow but zelle is by far

the largest several times its nearest competitor. it is approximately three times larger than its nearest rival. zelle transfers our nearly instant and irreversible. by the time a consumer knows they have been scammed usually it's too late to do anything about it. at least according to zelle and according to the bank that own, control and in effect operate zelle. just three banks to j.p. morgan, chase, bank of america, and wells fargo handled 73% of all zelle transactions in 2023. too. payment apps no question about that fact. i want to be clear fraud happens on all of them but zelle

deserves particular tension because of his direct connection to trusted financial institutions. zelle and the banks that own it offered to customers the appearance of the trust they feel they deserve. but the risk of their our real and present. and they simply are failing to protect consumers and the way that they deserve it. 13% of p2p platform users report sending money to someone and later realized it was a scam. the kinds of scams are various, employment, romance, ai. there are various categories but the bottom line banks are

failing to do it they should to protect their consumers. the subcommittee has heard many counts on fraud california teenager received as quitting death threats and lost 10,000 dollars on zelle simply because he wanted to protect his family. in florida colonel ptak and tillman's bank account user confidential information to manipulate her into transferring almost $5000 to zelle scammers. in arizona menus zelle to purchase parts he never received i like to enter into the record a collection of news articles about dealt scams and statements we have received from consumers about the personal experiences with zelle. with this they are two individuals have personally experienced those stories. we thank them for their bravery.

for their initiative and coming forward. arianna devol will tell us her story and receiving exciting summer research opportunity from a professor at her university only to learn she was out $2400 that she never had. and humphreys is here today to tell us her story of how her 94 gold mother was scammed out of $3500. after being told her brother was arrested and needed bail money. how its insufficient safety measures allowed the scan to play out again. we thank you both. many times that of scams exist. but what they have in common is that these stories entail loss money due to time and time again

zelle the big banks have said they could not help. what they mean is they wouldn't help. their attitude has been not our problem. well the banks of america basically the seven that own and operate zelle it is your problem. you own it. just as you own zelle. you have the expertise, the resources, and the obligation to make sure that you do better. we are also going hear from experts as part of the bipartisan inquiry into zelin early warning services. a company that operates zelle and we hope to hear from the banks. we actually invited them to come here in june and explain how

they can do better and why they have failed to do so. we have found that customers of j.p. morgan chase, bank of america and wells fargo admitted claims reflecting a combined total $4,056,000,000 loss to scams and fraud in one year 2022 alone. and only a fraction were repaid three and $41 million more than two thirds of these losses were never repaid. the growth of mobile payments shows no signs of stopping. unfortunately neither do these do thescammers who are preying n american consumers on those

apps. criminals are increasingly using scams tailored to individuals with ai voice cloning personal details pulled from the abbott data sold on the dark web and increasing the risk. those risks are growing so much to safeguard. zelle and its owner banks are that frightening trends no question they put have been put on notice. they track detailed information about the latest scams. they are failing to stop them. and feeling also to make their customers whole. there are concrete steps these institutions can take to better protect customers. for example banks can extend the protections to credit card users to zelle transactions where they can allow customers to cancel or reverse payment within a certain period of time. they could in effect provide

better means of authentication, more friction, and more time. before a transaction is completed. those ideas are only few the possibilities for divorce for consumers the big banks have accepted some of the transactions on zelle they have made the decision this is just the cost of doing business. but it is the cost of their consumers not them because it is the customer who is out of pocket. that is why we have invited zelle and the three largest banks to appear in today in addition we will be hearing from experts have studied the issue can better suggest potential remedies and preventions up or i i look forward to hearing from all of you. i turned to the ranking member.

>> mr. chairman i will ask that michael written opening statement be entered into the record of a couple comments. interesting hearing. i was a consumer fraud consumer scams are a real problem in our economy. but things likecybersecurity ri. all these things are troubling. it is noteworthy to understand the differences of for example credit cards, debit cards and. too. debit and credit cars are interchange fees so the banks really rake in hundreds of billions of dollars with a profit. in their unauthorized transactions they quickly reimbursed not to one 100% i am looking bank of america here credit card two-point to billion dollars worth of a fraud they got reimbursed 1.6 per debit cards about a billion dollars of fraud they reimbursed about 66% of that 660 million. there is no doubt about that zealot reimbursement is at a

much lower rate but it's really just a service. it's a software they sell to the banks to allow. too. payment. the other way to transact business is cash people don't carry cash if they don't instantaneous transaction if they do not want to pay an interchange fee apparently they used. too. services. they want to do it for speed. they want to do it to avoid the interchange fee. and as a result of a company like zelle does not of the hundreds of billions of dollars in interchange fee profits to reimburse. it does appear that they reimbursed for unauthorized or some unauthorized purchases. there is a fair amount of friction for this many steps you have to go through to actually have that money transferred. it is the caveat emptor. i will say caveats user beware. when you're transferring money. too. the money's gone inside your

checking account for us would be very difficult to recover but the only way for the chairman to say you ought to extend the same protections and credit card companies do they don't have the prophets off of the system. interchange fees they view it as. this is a different system but again it leaves you be concerned about scams and fraud. there's a fair amount of responsibility and part of the users to try and prevent that with cap people who have been scams. you can understand why people all the sudden quick transfer money they have got a loved one in trouble. it is despicable these crimes are being committed against them. but to necessarily blame a come beneath providing a service without huge financial rewards,

like the interchange fees interested in testimony and want to hear people have a say about that. >> when judas the witnesses. stephanie of the tatar law firm with disputes against credit reporting agencies, debt collectors and financial institutions for almost two decades. arianna devol is a rising senior in north carolina a and t state university earlier this month. arianna was targeted by a zelle scam that claim to offer her employment as a university research assistant. she ultimately lost $2400 that fraudulent scheme.

jon is the vice president of public policy telecommunication fraud at the national consumers league. he is a prominent advocate for stronger consumer protections. particularly related to technology, data security, privacy and more. from laurel maryland 3500 dollars on zelle. she is here senior director of digital marketplace where she leads the development of testing framework standards proves he served as 10 years at the

protection bureau and various roles. few would rise and raise your right hand do you swear the test but you're about to give is the truth, the whole truth and nothing but the truth help you god? thank you. >> could apted and chairman blumenthal and regular johnson thank you for the opportunity i'm very glad to see up to consumers on the panel today i myself hope to bring clients they are reluctant to testify against things about cell fraud which are not available for public review and consumers can't appeal.

which prevents a disclosure of significant information or because consumers are forced to sign confidential settlement agreements. the banking relationship with banking institution there affiliate. largest banks in america not only are the consumers forced to file lawsuits to make the banks comply there punished for doing so. we don't hear directly from a lot of consumers please do not take that zelle fraud is not important to consumers. this is due to the shroud of secrecy to impose on consumers.

it's pervasive and ever evolving it's the gateway consumer financial crime often leads to other bank product like wire transfers which are largely unchecked by current laws. bank phone numbers seven card hacking, exploiting data breaches to gain access zelle transfers. their costs ahead of two steps the banks when perpetrating their fraud schemes left to carry the burden of undoing the damage done to them. i do not mean to say damage done to their bank accounts that cost of zelle fraud is not simply the dollar amount significant emotional and mental component most are living paycheck to

paycheck. can you imagine would you please imagine 75% of your checking account balance was gone because of zelle fraud? think about the impact if you are a retiree to make up those losses. every minute of every hour of every day countless sleepless nights for months on end. worrying, wondering, stressing waiting for banks to do their job. you do an investigation and agree fraud was committed as they get their money back. these consumers lose money in the blink of an eye but it takes a weeks, months and even years to get their money back if they are lucky.

often refused to conduct investigations or they delay investigation into zelle fraud they request consumers to complete paperwork or file police reports contrary to their duty under the electric funds transfer accident. there investigations are superficial at best. lacking thorough record reviews or inquiries. thanks appear to prioritize approving transactions occurred rather then and verify authorized by consumers. also against the electronic funds transfer active. crucial evidence such as the new recipients with random names or sequences of numbers or letters the edition of unfamiliar devices or ip addresses and unusual transaction patterns are frequently disregarded. thanks neglect to analyze past spending habits rendering their perfunctory examinations of limited information falling far short of what the fta required

for its editors, if you are truly interested in effecting change, and financial institutions really want to do better in the first step is to stop thinking of consumers as account numbers or names written in black and white. educating consumers is not a solution. your on fairly free and the onus on every consumer that in the banks can keep up with the solutions must include safeguards for suspicious activity. delaying payments, putting an end to rampant victim blaming financial institutions demanding banks investigate all unauthorized transactions, banks must have the risk of zelle fraud between spending bank and receiving back it we must also demand transparency. banks get away to shoddy shoddyinvestigations because sow people know exactly what happens my closed doors but thanks must be held to efta compliance standard they are after all

consumers of hard earned money but thank you for hearing me out today on this critical issue. appreciate your attention and consideration of the necessary reforms that need to protect consumers and the devastating impacts of zelle fraud. >> thank you so much. ms. devol? >> hi. on the afternoon of may 1 i applied to a research position from an e-mail i received on april 30 i believe the hiring manager to the music professor at my university. after applying it via e-mail by providing my resume i received follow-up questions, for example how would you rate your communication skills? are you a u.s. citizen question give prior research experience? is that a form i passed the criminal academic background screening. further instructions on the e-mail confirmed office suppliea big needed for the position and i will be sent a check, which i would then need to provide to the sales representative who is responsible for any supplies on

my behalf. i received a check in the form of a pdf on may 22 e-mail that presented itself as a payroll department at the university but it actually had that. edu domain presented in the e-mail address. has given specific instructions to print the check to a mobile deposit only once i deposited the check into my account the $400 was available immediately on may 3 $2000 would be available the following day. i inform the fictitious professor of this was told to zelle the money as it became available. alice provided the name and e-mail address of the sales representative and asked to send a screenshot of it with confirmation codes. i did as instructed sent the $400 followed by the $2000 on may 4. both are listed as pending in my bank account which i inform the fictitious professor of it. that point i was told the representative would wait until confirmed before to supply.

my mother observes an exchange of my counsel called me too figure out what was going on. after asking several questions my mother help me too understand and realize i was scammed for shall be to contact the bank and file a fraud claim. i called the bank immediately and explain the entire situation to the bank representative but with the representative assistant i failed to fraud claims one for the $2000 another for the $400. i was told investigation will be conducted i would receive a call back from the bank with the status update. on may 7, i woke up this pain wl in my final exams when i checked my bank account found i was in a deficit for $2400 askance into receiving and sending off. i was devastated. in addition to a five major final projects i had to do for four courses within the last two weeks of the school year, my money was already getting low i stressed out of my mind is staying up late to complete. i saw myself for the very first time in my life. all this as a result of wanting

to work and have a job with flexible hours to accommodate my summer internship. the towing to report to the fbi but i was told by the police i was only student that was actually financially impacted by the phishing scam beutler the following week that i was not. i reported my situation to the fbi my mother and i called the bank to see if there is any feasibility i will be reimbursed for $2400 that have scammed out of. although we never received a call back from the bank on the investigation they were doing, we were informed at that time both fraudulent claims were denied. i returned back to the campus to complete one of my projects. after turning back to my room about two fraud claims with self of the $2000.400. in the process of filing those claims, asked for a zelle payment id but there is a note in the faq's if you submit the zelle payment fee at your bank app did not note the zelle payment idea was to contact their partner that this

affiliated with. i called my bank asking for the zelle payment id but however is transferred several representatives of multiple department to clean the zelle department. none of them were aware of what a zelle payment was or where should find it. i called zelle customer service line was automatically put through to an automated machine which hung up on me after i told of the fillet with zelle through the bank product and contact the bank. i cannot get through to human representative at all after calling cell multiple times. within the frustration, the zelle payment id was supposed to be a total 12 visits with two additional zeros in the front. this seemed to work as the forms were submitted. i completed both of those forms only to receive a submission of the forms in my e-mail i sub yet to hear back from zelle my bank and i am my online fraud claims i want to get my money back and more importantly prevent this

from happening to someone else. thank you. >> thank you very much. >> good afternoon chairman bloom without rancor johnson mems the subcommittee. my name is jon breonna the vice president public policy, telecommunications and fraud at the national consumers. founded in 1899 ncl is nations pioneering consumer advocacy organization. for more than 25 years ncl has worked by our fraud.org campaign to educate consumers about the warning signs of fraud and promote public policies that protect the american public from fraud of all kinds. senators, upfront and united states has reached a crisis point spread in 2023 ftc received 5.4 million complaints about fraud and identity theft. at 54% year-over-year increase versus 2019. but total annual losses of more than $10 billion. as sobering as those numbers are

is just the tip of the iceberg. ftc report estimated the true annual fraud losses were more than $137 billion annually. the cost of fraud are not just financial. many of fraud victims report struggling with mental health issues after the event. sadly some scam victims have committed suicide due to the trauma. too. or p2p payment services have a significant role in this problem but in 2020 to four in 10 americans reported using p2p service at least once a month with 18% using them at least once a week. p2p has a crown so to have fraud losses. fraud losses to the ftc at $210 million was more than 65000 complaints in this category. true losses by conservative criminal fraudsters by p2p platform is likely well into the

multiple billions of dollars every year. while fraud occurs on all major p2p platforms, fraught him zelle poses unique concerns first, zelle can be used to transfer funds between anyone with the u.s. and bank account at a participating financial institution. indeed widespread availability of zelle to millions of bank customers is exactly why it has become an attractive payment method for criminal fraudsters. second, because zelle is in competition with paypal, then mill and cashed out for transaction volume any voluntary action that makes it harder to use because of additional antifraud requirements is likely to put zelle at a competitive disadvantage to its competitors. while no payment system is immune from fraud the scale of fraud on the zelle platform is unacceptably high. just for events in the zelle platform reportedly on pace to receive scam and fraud claims in excess of $255 million in 2022.

this is likely only a small fraction to the total fraud losses. based on current zelle growth rates repotted the sixth -- nine basis points is estimated total fraud rates on zelle will likely eczema exceed $1 billion annually by next year. even when consumers recognize report the fraud to their banks their claims are denied in the vast majority of cases. threet banks who provided fraud reimbursement rates to senator warren's office reported reimbursing only 10% of such scam claims. because authorized transactions even if all parties involved agreed fraud was involved they are not covered electric trends act should liability protections for these losses and that being born by those who are at least able to afford the individual consumers. warning messages consumer education will not and have not put it meaningful debt and fraud rates indeed we hear from

victims of fraud these scammers are incredibly adept at coaching their marks around consumer warnings the banks provide. scammers get clever and more innovative every day expecting everyday consumers to accurately spot and resist fraudulent schemes run by sophisticated professional criminals is unlikely to yield a more secure p2p payment system. to put it meaningful dense and fraud on zelle and other p2p platforms, congress must create new incentives for p2p platforms to invest in more security. fortunately a bill to create these incentives protecting consumers from scams act is introduced by maxine waters the bill would expand the definition of on at the rise transfer to cover it fraudulent induced payments. simple fix would address a fraudulent induced payments at all plate payment platforms. including p2p apps and gift

cards. such a solution would not be unprecedented. recently enacted rules in the united kingdom require banks to reimburse victims of fraud in the inducement with issuing and receiving the banks sharing liability for making victims whole. the uk rules can be a model for law in this area. chairman blumenthal, ranking member johnson, members of the subcommittee we think of your continued work to protect consumers and for holding this hearing. the consumers like the two sitting next me across country think different the consumer inspected as we consider these important issues. >> thank you. >> chairman blumenthal, ranking member johnson distinguished members of the subcommittee, good afternoon. thank you for inviting me too testify about his sophisticated scam that targeted my family. my name's and humphreys i live in maryland. unfortunately type of fraud that happened in my family is all too

common. i believe my testimony can shed light on the tactics used by scammers and the urgent need for stronger consumer protection. on the morning of february 7, 2022 i arrived at my mother's baltimore county house around 11:00 a.m. her caregiver came to the door and said your brother is in trouble back of my mom on the phone was someone claiming to be my brother. mom sought me and said to the color, here is a gun, talk to her. thinking this is my brother ared trouble is horrified to hear the story. he was in a terrible auto accident, his fault. the other driver who was pregnant was in critical condition. he was in a courthouse in virginia facing arrest and jail time. she explained what his voice sounded different than normal he said he had inhaled airbag chemicals which were causing him breathing difficulties. the collar knew enough details about my family members to be believable and he appeared to be quite scared. he had answers to questions i

had not even thought to ask. he asked me too call his suppose a lawyer, mark rossiter's urgent i post bonds of my brother would avoid jail time. drop the day i had multiple phone and text exchanges who gave it seemingly plausible answers to all of my questions. mark ross told me a huge amount of money in cash, i told him i cannot put my hands on. i frantically tried to figure out how to get money to the bonds of company he asked me if i had access to any online payment apps like cash app or zelle. i was familiar with zelle, is it regularly through wells fargo to pay for my mother's caregivers. i agreed to make a transfer it with zelle was instructed to use it to send $3500 to someone at the bond company. that was enough to begin the process to have my brother released her. so i was able to send $3500 to

him through zelle. i discovered the fraud around 5:00 p.m. that evening. my real brother stopped on his way home from work to see my mother but she told him but have been going on he called me immediately. i stopped communicating with mark ross hoyt also been communicating with there was additional bail money i was to come up with. i stopped looking back on if there were red flags. for example white in the suppose a lawyer, offer a secure legal payment system? why would he not accept paypal which i had initially offered. why did he accept zelle? what was bond being posted to an individual and out of business? and that moment however my mom and i were very afraid for my brother's well-being. scammers who targeted us were very good at making the situation seem real and urgent.

i think what happened to us could happen to anyone. unfortunately, trying to recover from this crime has proven to be almost as traumatic as the crime itself. there seems to be no recourse for our loss. i am neatly called wells fargo that i spoke to representative in the fraud department described what had taken place. gave him names, phone numbers and addresses. he sympathized with me and told me it sure sounded like fraud. heat said they would investigate it i would have an answer within 10 days. ten days went by without any updates or communication. i called wells fargo repeatedly. i still thought i was going to get our money back on march 10 my claim was denied. they said i had processed the transaction successfully and there was no fault found. within 24 hours of the scam i filed paperwork with the ftc and the local police. neither of them gave me any reason to believe they're going to be able to resolve this case.

in fact, both of them just told him it will take this information in case we get those numbers on it hit someplace else. looking back on it, wells fargo website did have a warning about sending payments to people similar to make sure you have the right number because once it is sent, it is gone. there were no big warnings like there are now. not long after the scam happened to us, wells fargo did sent updated notices for zelle transfers spelling out they are not responsible for certain electronic transfers. none of that existed when we were defrauded. and now they ask a ton of questions before you can send money via zelle to a new user. they know what is going on. still though they have no financial accountability. my questions are these, wells fargo knew there were no consumer protections on zelle white did and do they offer it to their consumers? since the wells fargo august bank of america and the other major banks have financial why

don't they have financial accountability for the protection of customers? why is zelle allowed to operate this weight during the high probability of fraud? i feel taken twice by the scammers and by wells fargo and zelle. chairman blumenthal, ranking member johnson, share my story to raise awareness and to advocate for stronger safeguards. the emotional financial toll of this scam on my family was significant it is still being felt. i am sure i'm one of hundreds of thousands if not millions of consumers who are being targeted this weight. here in congress is urgent to stop the scammers, thank you. correct chairman blumenthal, ranking member johnson and members of the subcommittee. thank you for the opportunity to testify on this critical issue of consumer protection in the.

too. marketplaces. i work for consumer reports were for 88 years we ensure consumer marketplaces products and services are safe, fair, and just bring 2022 "consumer reports" conducted a comparative evaluation of the most widely used p2p payment act apple caste, cash app, then no and zelle. our study published in 2023 found all four services lacked clear accessible disclosure about the availability of fdic insurance. full scope of fraud policies. for the rights and protections. there are several aspects of the business model create unique risk for users compared to other p2p services.

for example there are not clear published fraud liability policies. unlike venlo cassia zelle does not have a public facing policy detailing consumer protections and reimbursement rights for all unauthorized transactions. victims unclear on where to turn for help. you have also heard they provide a fragmented customer service that is split between the network operator and participating banks which can bounce victims back and forth. a centralized consistent process is needed to help consumers when they fall victim to fraud and scam. there are weaker authorization safeguards. zelle enables instant transfers to be heard with less upfront. it is less secure and can enable faster fraud compared to other p2p apps which employ an app to

factor in multi factor authentication. multifactor authentication. additionally this lack of transparency. it is up public statistics on the development resolution of fraud and scam complaints. this hinders effective oversight of how well policies are working. in the context of increasingly sophisticated scams, particularly those leveraging the most advanced technology such as generative ai, it is increasingly difficult for consumers to detect and avoid fraud. scammers can create highly convincing deep fake videos impersonating individuals known to the victim and deceiving them into transferring large sums of money as you heard. in such cases a consumer who sends a money under duress cannot truly authorize the payment in any meaningful sense the scale of this issue is significant.

the u.s. consumers reported losing over $10 billion to fraud in 2020 representing 14% increase from the previous year. bank transfers and payments include p2p accounted for a 1.86 in billing and losses. to better protect consumers but recommend zelle and participating banks adopt and publish a clear policy they're jacob reimbursement for all unauthorized transactions including fraud in the inducement. we also recommend implementing stronger transaction monitoring and identity verification safeguards creating streamlined process for consumers to report fraud and seek reimbursement so they do not have to balance between the bank and zelle. we recommend providing greater transparency about fraud trends and reimbursement rates and additionally banks establish a robust framework for sharing

fraud information across the industry. congress should also clarify through regulation e applies to fraudulently induced payments. not just unauthorized transfers. financial services grow more complex and scams become more sophisticated its banks, not consumers that are best because it was at her best position to from fraud. implement robust safety measures and bear the cost of product defects banks should be required to invest in advance fraud prevention technologies and reimburse consumers for losses resulting from increasingly sophisticated scams. we look forward to work with the subcommittee stakeholders and consumer advocates to create a fair and sustainable p2p payment ecosystem that truly protects consumers while harnessing the benefits of fast, convenient,

movement of money. thank you so much for the opportunity to be here today for. >> thank you. we are going to have questions, seven minute rounds. we've also just begun a vote. senator johnson has gone to vote. when he comes back i will go to vote will keep the hearing going and i understand senator beutler has another obligation she needs to attend. i went to call on her first. >> i so appreciate the flexibility chairman blumenthal. thank you so much for having this hearing. that's another demonstration of your career in public service as a consumer advocate really showing up for the american people. thank you all for coming here. mr. voll, ms. humphries for sharing what a lot more people have gone through intent to keep to themselves because they are ashamed. they think how could they have fallen for this?

the fact that two of you have come here representing such a diversity of experience, geography and community representation helps to give a face to the vulnerability of all communities to be targeted toward the scams and even when they are trusted tools that show up on the device we love the most. they are tools that should be interrogated we should be making sure as public servants we are doing everything to put in place the protections that you need. i would love to start with you as a fellow hbc you graduate. making sure to lift up your courage of sharing what happened to you. i am sure it is not on familiar to others that you might know on campus or in and around your community.

it's you spent a considerable amount of time to figure out a way to communicate, to over communicate and communicate more. can you share a little bit? i read your written and submittedtestimony even as stays the payment on the final bit of what you're offering. could you share a little bit more what you were able to find out her relatives to have these kinds of scams are directed or were directed towards you and others on your campus? try to ask that student vulnerability population. if there's any wider exposure to this kind of scam on your campus. >> of course and thank you, senator beutler. i really appreciate that. >> shout them out, shout them out. >> yes i got the e-mail first on

my school account i do not know how they got my school e-mail account i recently learned today actually six other students have been scam the exact same way i have. and with that i guess they at first that had research professors ending with@gmail.com kind of thing. then they asked us to go to another e-mail address to keep in contact with them. that is when they start >> our payroll e-mail address that's with the send those fictitious checks. and then ask for payments and things of that major bridge that answer your question? >> yes it does it leads me too my next number they give for answering so well. i would assume the ways in which mr. voll was talking about the sophisticated nature, the evolution of these scams and in particular directed towards the young people hbc you campuses.

i wonder if in your research or your engagement in the advocacy space and advocacy and resource is there any information you might have in terms of how much of this is directed towards young people and students given the financial vulnerability of most young people particularly when headed toward the end of the school year. >> thank you for the question. i can have a little bit of light weight in addition to testing products we irregularly engage consumers into representative surveys of thousands of consumers across the country so we are able to get a sense the various demographics. what you do see is the more vulnerable consumers tend to be targeted. you do see younger consumers.

you also state frankly the other end of the spectrum. older consumers who are self reporting. that they are victims of. they are induced scams in these instances. >> thank you for that. that the right way to pronounce that? >> that woman with a ph and z in her name i would like to get it right. thank you for that. is there or mr. brielle would you add additional insights from your perspective to this line of question with vulnerable communities in particular particular time of year. there are so many commencement's happening right now and this is a time where we have the opportunity to get folks were watching the five people who watch c-span2 get students to understand they are eight

targeted audience and group of victims particularly in this moment i open the question to both of you as well and i will love to start with you. >> thank you. my experience has been students are probably more often targeted to get those numbers in greater numbers with that population. but the older generation are suffering larger losses and significantly larger losses. the trouble with that is they are losing money and not able to make that money back because the art retired or losing significant amounts of their retirement income. i do agree it's time for graduation for this a lot of kids looking for jobs right now. through social engineering they are targeted absolutely. >> is to add on to what

ms. tator had to say, so that we note fraudsters look for specific vulnerabilities and specific target audience they go after. financial distress is when we see very often. we think of students we often think of the stress they are beginning to feel as student debt starts to cut into what they have do spend money on. in her case the offer of employment looks very promising to someone who's thinking about having to pay student loans off. and the scammers know this and they targeted their scripts to prey on people who might be vulnerable in that way. they have a script literally for every audits from older people to younger people to everyone in between. >> thank you all again for being here. and for offering your testimony here. it is such a critically important issue. it's worth noted ms. humphries

the end of your statement that e fact this is a product is majority owned by the largest financial institutions really does make it imperative not only the sharing of your stories but the action of our subcommittee and congress to do everything that we can to protect the american consumer every bit of the age and experience spectrum. thank you all for being here and thank you mr. chair. >> provokes thank you, senator beutler. >> about three quarters of the fraud claims are never reimbursed. can you explain why? >> mucks to the insured during attorneys is because many banks delete the electric fund transfer act prohibits or

eliminates their duty to do an investigation because the consumer participated in one way or another in the fraud. meaning they were on the phone for they transferred the money picked on a link, they clicked on a text message ultimately they did something to perpetuate the movement of money, the banks are not responsible for. >> regulation e they believe does not apply to them? to use the technical legal terminology for. >> because the consumer something to the movement of money they believe the electronic fund transfer act regulation is not apply to them too. >> the mere fact the consumers finger was on the button disqualifies that consumer from any reimbursement? >> is frustrating as that is, yes that's exactly right. >> you brief them on the law? >> absolutely not. >> even if they continue over especially if they do, with

their resistance perhaps that regulation ought to be clarified, correct? >> i agree with the regulation absolute is be clarified. >> you mentioned what we know about this problem was probably just the tip of the iceberg. because a lot of consumers are either ashamed or embarrassed to report this kind of fraud is that correct? >> that is correct. we know foreign and $56 million was actually reported in 2022 alone. the numbers have been skyrocketing. the number 42023 was higher and 24 will be even higher. there is no indication is there the level of reimbursement have increased at all? >> now that i've seen, no.

>> probably at the same proportion? >> i would estimate yes. looks to be advantageous to have more people report more of this fraud so we could note more accurately what the dimensions are? >> it certainly would senator, yes. >> how do we encourage it? >> one of the ways big encourage compete to report this fraud is by working with the media, with members of congress, with the banks themselves to destigmatize this. we use turns like i was duped i can't believe i fell for this. or how could it be so stupid? consumers here this whatever whr they share their stories. this really creates a culture of fear around reporting. that trickles down into the resources of business and law enforcement devote to go after the scammers. >> ms. humphries and ms. devol, let me ask you, were you

reluctant to come forward? was their disincentive or were you discouraged about it either because of your own emotions are the way the system worked? >> yes i responded to consumer report e-mail and said yes i thought i was finished with it. they said can we tilt to the congress and i said i don't know. and so here i am. is very reluctant because i am ashamed but i only told my children last night when i shared with them the link because i did not want to share that with him. >> the cost to you, regardless of the reimbursement perhaps you could talk about those costs to you emotional or psychological terms. you and your mother. >> might mother's only concern was my brother but she didn't care what it costs. she once had that done.

and so that she was happy. ninety-four years old her son is in trouble and now her son is on his way home and when he arrived at her house that night she was thrilled because it had worked until he told her i was never in trouble but i do not know what is going on. she was just happy that her son was okay. i, on the other hand was ashamed i had fallen for this. and i ask questions as it went to but i was so caught up into it i could not get out of my own emotions. i did not know where to turn because i wanted him out of that space. when the lawyer said to me can you get me some cash? i'm thinking cash? who has cash like that? but he lowered my brothers a bail after that i was grateful put eyes i am reviewing all of this i am thinking he had my

emotions in his fingertips as i asked a question he said i would have to go to the court and ask them if they will accept that. i am waiting and the time is passing. my brother i'm trying to get them home and i'm waiting for the lawyer to get an answer for something. i was completely invested in the trouble here. when it was all said and done i was thinking what an idiot. i had all of that opportunity for my brain to kick in and say wait a minute, now what? i couldn't. i did not have that in me to think of anything except i've got to get my brother hope. but it's been overwriting most everything. it took me a very long time to forgive myself. and i thought i had until you all asked me too respond to this. and now i am reliving it. i am again ashamed. i don't people watching would

say i would never fall for that. which honestly is how i felt about myself when i watch other people report on their scampered how could they have fallen for that? what a dumbbell? and then i fell for it. there's been a great humility on my part to realize none of us are immune to this. those of you who have not done this and think boy, she is old and she is dumb. but just wait. cannot do anything except respond to it. i did tell my children last night most of them were supportive. i have not heard from some. it is a hard thing to come and ask breasts vulnerability. and when there is money involved it was my mother's money i am on an account with her but as my mother's money. i could not let my mother suffer that loss. i gave her the $3500 so it is now my loss.

my husband's loss. i could not see another way out of it. that is what i mean the financial toll is there i lost $3500. but the emotional toll just continues. >> very well said. it's just an observation, zelle instantaneous or near instantaneous clearing and ben mel these transactions take one -- three days to settle. your brother it would have come home that evening and you would have been able to reverse the transaction because of the delay. now i recognize people want everything to happen quicker in today's society. faster is always better, right? well not always.

especially if you are paying a bill, faster is not always better if the bill is a fraudulent. going just missed of all the question. were you fearful or reluctant to come forward? what were the costs to you the on the financial loss? >> yes, definitely. more so than even the financial part at times because i go to a university i'm going to feel like a family at times. i have $2400 how on earth did you fall for that? even some of my own family members tone with me felt disheartening. i felt like mrs. humphrey it was say i'm a big dumbo how could i fall for this? it took a toll on my self-esteem, my intelligence in

general. shoot his or try my best to my academic pursuits by pico soil when you go through this. now i've recently learned i'm definitely not the only one for my own school that hasn't been involved with this scam now i feel more seen. when i went to abc 11 i felt as if i could help anyone to prevent this in general i would. i have to overcome that. but i know whenever you close a door and i would be in my room i would cry. i'd really cry and think how on earth did this happen? in the short amount of time i have my final exam for my final projects. some of the most strenuous and difficult that i have done throughout the entire school career. it was so disheartening. i was devastated there is too much of piling onto me at once. i thought i could not talk with

anyone because they did not understand and would scrutinize me. that is why i am here. want to let you know you have the courage to speak up as number but to know that you are seen and you are not alone in this. >> you think you both for being here your statements are very, very helpful. setter johnson has returned i'm going to go vote i will be back as quickly as my feet will take me because i do have more questions for all of you and i apologize we have this interruption. going to leave it and senator johnson's very capable hands. >> thank you, mr. chairman. first missed about ms. humphreys, thank you for your testimony all of us are thinking by the grace of god, no way should you feel an adequate. these are very sophisticated criminals and they are preying

on people's emotions. they. on yours. again, i find it totally understandable. a couple questions for you mr. ball. the $400 check they sent you was a fraudulent check as well because of you deposited it in good faith rethought the money went in there but it takes a while for the bank to get back to you and say this is no good. can you fill me on that first? >> yes it was $2400 check in total. >> they sent you two checks one for 400 and also the 2000 question what excel came into one check of $2400. he raised the question again? the one you just ask? >> asked? >> you got these checks they looked like valid checks to you prodigious take them physically or you deposit those electronically?

>> i deposited those electronically it gave me strict instruction mobile deposit only that as of the first given to my account. whenever i first realized it was a scam might bank was telling me would take them five -- seven days to realize the validity of a check. it appeared my account was still spending but they would basically give me that money. >> when did you find out those checks were also fraudulent you didn't have $2400. $2400 kuester comedydaisy that ? >> i believe it was just two days or a day. it wasn't myself who realized it. it was my mother seeing my account and realize something was going on. she called me and made me realize it was a scampered this is before us and the deficit or they took the money out. i just knew it was a scam at that point and i filed two claims the $400 in the $2000 within the same hour i realized in three days later, i was in deficit. >> i don't get ever uses dell before? was it used it once or twice

just the transaction of actual peers i know and friends. simple things. >> why did you use it question is not accusatory. i have never use these things but know people who have i just never have. why do people use these? >> i believe because of its quick taste in nature and how effective it is going into the bank account. it's bank affiliated directly with what made me realize it was more trustworthy. cook is going to your bank okay. >> especially for the situation. i did think it was someone from my school and they need office was sent to me so i could have this research opportunity that they would need it specifically and their bank because cash app can take time to go into the bank. think venmo is the same way a couple days or three days. whenever i was thinking about at the instantaneously that would be okay.

and because of bank affiliated not that i could get that back easier. >> again, you are not thank you because no consumer thanks about the interchange fees or anything like that. the credit card was not available in the situation but they were telling you use the direct payment and really do not question it at all. >> of a bit confused about the way you said it but because they sent a check i thought this money is my own. >> it's covered with boxes send it to me. >> a very good at what they do. this humphrey it may be the answer that question but you said you would use paypal in the past i think, right? >> yes i use paypal to buy things. i have bought some fraudulent things and it's very good about refunding my money. during covid i bought something and it came back completely --

make it's not what i purchase. i told paypal about it, they made me whole and he sent the step back. >> why he is paypal rather than credit card to purchase things on amazon? >> what is paypal person's credit cards? work sometimes i use paypal because i can cover my credit card number against the company making the purchase. if i paypal i don't have to put my discover card into the place it says make payment. so it is kind of ate one step my understanding it is one step away from giving some company i am not familiar with my credit card number. i can give the company at my paypal account. in the company gets its money from the paypal account. >> i can keep my discover or whatever card away from them. >> you have an account at paypal. paypal is access your bank account.

okay. i offered that to this guy and he would not take it. now i know why he would not take it. because it would not have work for. >> he was cheating you provide a uses dell for my mother's caregivers. i would have to pay the over and over and over again. it always worked fine until this and then i became very skeptical of it so i began to only -- i was in a dollar is this you? they would come back and say yes i got it. then i would send them the amount of money to cover. it has changed already heightened distrust of electronic payments. it's using paypal makes sense rather than just ragweed up my wife does it. here just kind of hoping. we do know as credit cards if there's a fraudulent payment they reimburse that. they have hundreds of billions of dollars in profit off the interchange fees to make those

payments. i will go to ms. hand right now >> gonna finish that? >> go-ahead for. >> that might be your thought on it. but mine as a consumer i don't care about any of that stuff. i was working through wells fargo which offered me a service that wells fargo should be backing up that service for the rest of the financial stuff i don't care about that. >> i completely understand that. you went to be made whole. i'm in the overall business models of these things and who has it to make the reimbursement. want to get into these other systems because that would you compare them with ms. hand. can you compare question reports a difference between paypal, venmo and zelle? can you lay out what the differences are and speak as loud as possible. >> sure. one of the things you have heard from various testimony is the friction. both the presence of it and the absence of it. so one of the things that is

absent, more absence in zelle is that absence of friction. what i understand about the models is that it's basically a service the banks offer as a way to basically make their service more attractive so that you get other services from the banks. >> so people don't use paypal and then mow. do they view the competitor? >> yes they do.

>> they claim they make no money whatsoever. >> that may be true like they would on credit or debit they do make money in other ways by a service that gets you to stay on your bank's website for example. >> then mow and paypal make money and other ways. they make money off of for example charging you a fee if you want to send money to a business or if you want to, the money in people's balances they make money -- >> so they have the balances. >> you mean making money on the balances then yes. >> do both allow the users to deposit money so it doesn't even have to go through?

>> that's right. they can go ahead and make money themselves and they don't do that, right, it's basically a software program that banks use so they stay on their platform they don't deposited into been mow and paypal. >> also to use the balance to do things like purchase crypto currency is so there are various apps and business models but the understanding i believe is correct. >> the reason i am pointing this out is let's say we want to pass a law and i'm going to get to it in terms of the electronic transfer act that is going to

redefine the transactions that is covered but i don't think fraud is and that's why there's this bill to include fraud, someone has to pay for that and the other companies have to charge fees and have anna amount of money to compensate people. there would be a certain amount of fraud. it's going to come out of somebody's and my guess is the services have to charge some kind of transaction fee whatever. >> if i could respond on that point, right now it is coming out of consumers like the one sitting next to me and so if it is being lost by somebody our opinion is the losses are best absorbed by the banks and the cost spread across the entire

network. >> i completely agree. how do you set up the system so it works? you said a couple of times in the testimony that it's not following the law but i don't know what percent they do reimburse for unauthorized use and again i don't know where that comes out and they do the calculation terms to what percent of the transfers are unauthorized and again these people are smart, they keep track of these things. in what way is it not following the law? >> financial institutions routinely don't follow the law and by that, i mean, that the banks when they don't return the money to my consumers and they routinely either don't do an investigation because they feel it's not covered under the act.

>> what is and what isn't covered? unauthorized transaction is covered and they have to reimburse for that means they have to investigate but if it's fraud, that's the problem with fraud you authorize the transfer so according to my breathing that isn't covered under the act which again is why the congresswoman has a bill that would include fraud covered under the act. am i getting that wrong? >> not necessarily. the term is a little tricky. it's easier to think about it in terms of unauthorized transactions a consumer had a hand in. >> what scares me is you have no

hand in it and the fraud that occurs or involves the authorized transaction but i think senator marshall's ready so i will let you go and i will come back. >> thank you senator johnson. if my questions are repetitive, forgive me. we've been bouncing back. my first question, consumers being taken advantage of is horrible but sadly it happens far too often in different forms. we see it with crypto, gift card just to name a few. should we be focusing our attention on the actual scammers and not the specific medium that they are using?

>> senator, thank you for the question. i don't think that it's an either or proposition. we can redouble to go after and put them behind bars and one of the best ways to do that is to give the entities in the best position to help that happen the incentives they need to do so and those that provided the data to the law enforcement they need are the banks. currently because the cost of the fraud that is occurring are not borne by the banks that they lack that incentive and i think that is where congress can step in just as congress stepped in and made sure the act had limited liability for debit and credit card customers and if you're anything like me the last time you found out a scammer got a hold of your credit card it wasn't because you noticed a suspicious charge on your bank statement but because your bank called you and said did you spend $500 on a tv in los angeles when you were in kansas the other day you said no and

reimburse to the losses and provided a new card. the same system could apply. at the best way to create a systems and incentives for the banks with the help of law enforcement is to give the financial incentives to put the skin in the game when it comes to going after them and the structure has worked great and would work great on pfd. >> don't you think we could do more whether they are successful or not a successful it's like we try to let them rob the bank don't you think there's more that we can do?

>> you would agree if we could shut it down or make these bad actors would find a mechanism to do what they are doing it's like a balloon you push it one place the air comes out on another part. >> they will look to other methods to get payment. we know crypto currency is becoming a far bigger mechanism. gift cards are another way they need to get paid, but just because squeezing the balloon doesn't mean we shouldn't squeeze the balloon in the first place. >> attacking financial infrastructure that's used by thousands of banks and over 100 million consumers should folks be on consumer education following victim scams? >> i do believe they have a role to play but i think that far too often consumer education has been used as an excuse not to do

more. the complaint we hear all the time as we heard just a few minutes ago scammers are very adept at approaching people around any kind of consumer education warnings they may get from the banks. they are professional sophisticated criminals and they have an answer to every question and method that you may see. that's why they are professionals and so -- >> why can't law enforcement crack down on people more, but it's keeping us from getting more of the scammers? >> i don't think that the banks have the incentives they need to invest as much as they should. one of the reasons we can go after bank robbers is because banks provide the information. at the banks have skin in the game when there's a bank robbery and we think they should have more when it comes to bank

robbery. i've been told 99.9% of transactions processed have no reports of fraud or scam, is that a reasonable number? >> i have no reason to doubt that number but i think that only underscores what we think should have been better if you create the kind of incentives that would require consumers when this happens they should be able to absorb those losses. either it's a very small problem. >> thank you so much. i yield back. >> thank you, senator marshall. i want to pick up where i left off and i apologize if i am re- treading some of the ground that

you have uncovered. i was talking about the emotional cost to them but also the business and emotional terms to come forward. could the banks do more to encourage reporting of these kind of scams? >> sure. but they should do more to encourage reporting. that's one of the things we saw in the comparison compared to then mow, cash app. we just had a conversation about education. there needs to be improved educational materials, not to say that education should suffice. it should not but one of the things we noticed in the quality of the materials available to consumers if you compare then

mow and cash app as a different qualitative experience. the other thing that is different is the policy for the reimbursement if you are a bank customer you've got a few days which is within the law but compared to then mow where you have 60 days to report unauthorized transaction in midland the consumers would be. >> what is the expanded use to put them more at risk and can they do anything to protect themselves? >> it shouldn't be on the consumers because you are using an app that is integrated into your bank account.

it's different from an app that communicates with your bank account so there's distance and that creates a buffer you make a card that goes 100 miles an hour you should be on the manufacturer to ensure that the car is safe and the brakes work for example. similarly with respect to other products if you provide a facility for instant payments, there are either should be some friction were assumption of liability. >> the website says it should be only with friends, family and people you trust but increasingly it is used for

commercial transactions for people or entities that literally there's no trust, relationship, landlord, and other seller of goods or services and member banks have tips on their websites for how businesses can encourage their clients for commercial or business purposes. are they going to expand their business model to include greater use of transactions between parties that are unfamiliar to each other? do you think that there ought to be some expansion of regulation or some other legal obligation to make sure that there's reimbursement? >> yes, absolutely.

we are not just seeing the expansion of the policy but increasingly consumers are offered so take this out of the fraud and a scam context for regular day-to-day use not just that consumers are choosing but they are being offered at the point of sale by merchants or in informal situations so for example the contractor doing work on the house. they will also take it as well. >> i am struck with the kind of disparity between the claim that there is no responsibility for these transactions and then the encouragement that it be used for those kind of transactions

outside of the relationship of trust. is that a violation of the federal trade commission? >> senator, i am not prepared to comment on that but you've made an excellent point that consumers are encouraged to use long things fast and safe and it's touted as a safe transaction and it is routinely proven not to be safe. >> i noticed in your testimony you have a number of recommendations which include creating more fiction. on the amount of fraud that is

victimizing consumers? >> absolutely and also they don't require change in the law. these are things that are very much under the control of the companies providing the services. >> critical protections offered by other services like paypal and cash app or not used. would they be well advised to adopt those kind of mechanisms? >> they do at the point of entry so when you log into the app you do have to authenticate and once you're in that app, you don't have that additional friction and i think that is a point of distinction. >> let me ask whether you

covered said why don't you adopt these kind of safeguards? >> we have conversations with member banks and they have a role to play and i think advocates like me will be talking to and urging them to take these kind of steps but our urging is no substitute for regulation that creates the kind of incentives. we are already seeing promising signs in the uk where similar reimbursement rules went into effect and i think that could be a model for what we do here in the united states. >> i would make the point i agree and every lawsuit that i file i'm imploring change and asking banks to do better than what they are doing.

the message is maybe received but i think strengthening the protection and regulation needs and implementing additional protections is the only way to go. >> we've heard from victims of the fraud and scams that not only did they fail to help them get their money back but they didn't seem even interested in information that could prevent it from happening again. a woman in maryland wrote about the scam out of a thousand dollars on by somebody posing as a police officer. the scammer knew a lot of her personal information and the phone number displayed was for the local police department. when she looked it was the local police department. after it was discovered, she tried to tell about this fraud,

but here's what their reaction was. i explained i had a police report and i had the name and phone number of an account that is being used for fraud. i asked if they wanted that information so they could shut the account down. the response was no, they don't do that. in other words, not our problem. as i said at the outset, it should be their problem. they care about their customers and consumers and we are talking here about the banks who have a relationship of trust in. would you say from the consumer perspective that it's safer than

other p2p payment apps? >> i think it depends on what aspect. based on the report, on their fraud policies frankly the educational materials compared to other acts probably it ranked lower. others did a better job of providing simple information and more robust reimbursement policies. friction is a safety mechanism in this instance and so the absence of that i would say is probably less safe. >> as i said at the outset of te kind of problems are common to an industry that isn't doing enough self correction and has no incentives now to do it.

without the reimbursement requirement it needs to be given additional incentives or requirements explicitly to do it. i will turn to the ranking member if he has any other questions. i don't think we have anywhere near enough information. talking to banks it appears that requires the banks to do the reimbursement.

my guess is there's more consumer responsibility and there's more money made in a credit card transaction then virtually no money being made then been million paypal. for j.p. morgan chase they reimbursed about 62.7% and by 11% about 80% on credit cards. for wells fargo reimbursement

rate 27.4% versus 24.6 so it's a real outlier. i'm just trying to understand obviously consumers like this peer to peer. it's growing. i'm trying to figure out if this is such a huge following, less than one tenth of 1% are reported as fraud or scams. it's the cost of doing business and we are all concerned in this digital world. what should be a regulatory or government response is i think what i'm trying to grapple with.

and unauthorized transactions that is going to be passed on to consumers. so it's everybody's best interest to limit this. what's the best way in putting this into incentivize people who have some ability to track these things and warn consumers to try to present these things. i'm just trying to grapple with the reality of the situation. can't really target them as a bad actor here. they are all grappling the same problem and none of them reimbursement 100% rate with different criteria. so from my standpoint, a relatively simple issue but kind of a complex problem to solve. so yes, ms. humphreys. >> two things. two things now that i'm here,

why does wells fargo want to use zelle? one thing i read is because it keeps people from using checks which wells fargo has to process and therefore it's cheaper to use zelle so there's a financial benefit for wells fargo. they do take responsibility. my other point was all i think they need to do, i'm a nobody with these smart people but it seems to me when i entered into

my zelle contact list they attached to an account that made the transaction successful and then they couldn't go find out where her phone number went? i don't know how all this works. within hours i said here are all the phone numbers. the lawyer and all of that. and they said i'm not sure what we are going to do about it. i was incredulous. that can't be. when google knows that i shop for shoes on a different device and now i want to another device and everything i look at is telling me about shoes, if they contact my google searches why can't they keep a hold of this

phone number to get my money back? it's infuriating. >> which is a good question and why we need to get the banks in here to follow the transactions. my guess, and it's only a guess. my guess is that those bank accounts come and go very quickly and they are emptied out very fast and transferred behind the crypto currency accounts are part of the problem, crypto currency now and they become very quickly. they brief investigators on this as well. it does depend on the size of the transaction and how much it costs to track down, again, no offense, 2400 or $3,500 fraud versus a lot of time and effort in those investigations. i'm just trying to figure out the reality of the situation is the best way to grapple with

these problems. are you looking at credit card practices or practices they can use with the debit card. i get a text and probably an e-mail immediately when the charge tries to pass so the other perspective here we had this conversation with of the p2p companies when we were doing the evaluation. are you taking a equivalent to steps in this real-time scenario to slow down the transaction to engage the consumers to say actually whatever this person's name is that it may have been the 20th time they try to scam a consumer. is that name on a list somewhere that can get flagged for other

consumers. >> putting my business and accountants hat on, it is a huge difference. credit card companies reap hundreds of millions of dollars of fees. these companies don't do that. they get the profits by smaller so the credit card companies one of the services they offer is the protection they get so much money on the fees there's a cost of doing business and no questions asked we just reimburse the customer without having to spend hundreds of thousands trying to investigate the particular fraud. it's an economic reality. so to the banks it is just a cost of doing business. looking at the reimbursement debit cards, this is where i would like to get the banks in here to get their viewpoint on this and what can we potentially do to tighten this up, but again

unfortunately there are criminals out. they are very sophisticated and they will play no matter what the -- >> senator, i have a draft letter, which we can send today to those banks inviting them to come for a hearing in july. i agree with you that we ought to have them come in and i will give you the draft so you can have a look at it, but i think that your point is very well. we need to hear from them. in the meantime, you know, i understand senator johnson's point. there is no fee in connection with the use of zelle that goes to the bank, but there definitely is a business benefit to encouraging and inviting and in fact pitching people to use

zelle as they do, a benefit to the banks. as they are not? >> there is. >> and what is that benefit? >> there's many that derive. at the ability to make people stay on their websites and look at other services and loans, for example, that they may take other services they may be interested in. so certainly they are making money off of zelle while maybe it's not the same economic model as then mow or cash app or debit or credit cards they are certainly making money off of it. there may not be an explicit fee that can be identified in an accounting sense attributed, but the reason it gets them more customers into the customers stay and they use the bank and its like any other cost of doing business for them. they may not see a direct flow

of money from the service, but it is ancillary and very important to their business and it's part of the cost of doing business, sometimes they reimburse but three quarters of the time they don't when they are a lawsuit so they avoid the cost when there's fraud but they have the benefit. >> these services are not in business to lose money. >> we talk about the requirements for reimbursement. i'm interested because i have seen instances in which zelle customers have not been repaid by their banks even when indisputably they have an obligation to do so under

regulations in the cases that i bring in court and federal court, every single time there is clear evidence that the consumer did not authorize the payment and it's why i sue banks for the transaction. it includes sending money to new participants in the app where the name is a sequence of random numbers and letters and transactions there's other indicators like ip addresses that don't match an ip address that the consumers normally transact business from so yes, i'm attempting to hold banks accountable in those very obvious instances of funds. >> what kind of explanations do they give to provide what they

owe? >> i often times and consumers often times here that you must have participated. you must have left your pin number available. you must have left your bank account open on a public computer, you must have somehow authorized somebody to do this to you. even in the face of very clear evidence to the contrary. >> all of you have contributed. it's an ongoing investigation. the banks will cooperate. zelle has said it wants to incorporate other platforms.

i'm going to ask that the victim statements be entered into the record and 12 new stories and eight university alerts about the dangers of the platforms. thank you all for your testimony. and the record will remain open for 15 days. the hearing is adjourned.

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