Welcome to Innovating Payments Top 3 News Headlines for the Week of August 26, 2024. In this issue, learn what banks can learn from Washington's attack on Zelle and its parent company, Early Warning Services. In other news, a new generation of fraud bots is more prevalent and sophisticated than fraud teams have ever seen. Finally, Buy Now Pay Later (BNPL) providers will not face penalties during the transition to the new Consumer Financial Protection Bureau (CFPB) rule requiring providers to issue regular billing statements, offer refunds for returns or goods and services that are not delivered as promised, and allow customers to dispute charges.
Read on to learn more.
1. What Banks Must Learn from Washington's Attack on Zelle (The Financial Brand)
Zelle has been making headlines this summer as federal lawmakers and regulators accuse its parent company, Early Warning Services (EWS), of insufficient action to protect customers from fraud. Senators, led by Richard Blumenthal (D-Conn.), following a months-long investigation, are pressuring EWS to fully reimburse fraud victims. Meanwhile, the Consumer Financial Protection Bureau has launched an investigation into major U.S. banks, which are members of the consortium that owns EWS, regarding their handline of fraud on Zelle. The crux of the debate centers on transfers made on the Zelle network that are authorized by account holders but later revealed to be the result of scams. (Read more.)
2. Next-Generation Bots Pose Formidable Fraud Challenge (Payments Journal)
Bots are a tenacious threat to businesses large and small. Even as fraud prevention teams are developing new solutions, criminals are continually advancing their bots and leveraging artificial intelligence to scale their attacks. A recent study from NeuroID, a part of Experian, which evaluated 55 financial services providers over a seven-week period, found that 71% of these companies experienced bot attacks in that timeframe. And for those attacked, 43% were hit by next-generation fraud bots almost exclusively. Next-generation fraud bots, also called fourth-gen bots, are more prevalent and sophisticated than fraud teams have ever seen. (Read more.)
3. BNPL Providers Won't Face Penalties During Transition to New CFPB Rule (Payments Dive)
In May, the federal agency issued an interpretive rule that said existing laws require buy now, pay later providers to issue regular billing statements, offer refunds for returns or goods and services that are not delivered as promised, and allow customers to dispute charges. "All of this is part of CFPB's work to ensure consumers can file disputes and have payments paused while those disputes are being investigated, receive refunds when they return products or cancel services, and benefit from helpful periodic billing statements," Chopra wrote in the blog post Friday. (Read more.)
How has your financial institution handled fraud on Zelle? What is your financial institution doing to keep pace with next-generation fraud bots that are more sophisticated and prevalent than fraud teams have seen? How does your financial institution view CFPB's decision not to charge BNPL providers with penalties during the transition to its new rule?
Check back soon for our next issue, highlighting the industry's most pressing and need-to-know developments. Until then, visit us online at Innovating Payments.
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AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.
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