Electronic Fund Transfer Fraud with Brad Rustin
Grifters, scammers, con artists
Sen. Elizabeth Warren, who championed the creation of Consumer Financial Protection Bureau (CFPB), calls the Zelle digital payments network a “preferred tool for grifters like romance scammers, cryptocurrency con artists, and those who prowl social media sites advertising concert tickets and purebred puppies — only to disappear with buyers’ cash after they pay.”
18 million Americans defrauded
Scams and fraud committed via the Zelle platform and other peer-to-peer services are surging. According to one lawsuit 18 million Americans were defrauded by schemes perpetrated via apps like Zelle in 2020. Some 1,500 member banks and credit unions participate in the Zelle service. People sent $490 billion via the app in 2021.
But Zelle owner, Early Warning, and its consortium comprising Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo, have refused to refund customers for most of their losses. Sen. Warren issued a report that the claims for fraud received by just four banks will likely exceed $255 million by the end of 2022 – a $165 million increase over 2020. The senator and consumers say Zelle is violating federal consumer protection law.
What is fraud?
The heart of the problem is this: banks and consumers do not agree on the definition of “fraud.”
For clarity on issues surrounding the Electronic Fund Transfer Act (EFTA) and its implementing regulation—Regulation E—listen to my interview with fintech attorney Brad Rustin of Nelson Mullins.
In addition to chairing the firm’s Financial Services Regulatory Practice, Brad counsels financial institutions in regulatory matters, including strategic agreements, product development, and operational compliance. Brad is a Certified Anti-Money Laundering Specialist and a Certified Regulatory Compliance Manager. He received his JD, magna cum laude, from the University of South Carolina School of Law and his BA in Political Science and History, cum laude, from Furman University. Brad is also the FinTech advisor on the Editorial Advisory Board of the Journal on Emerging Issues in Litigation.
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This podcast is the audio companion to the Journal on Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences and the Fastcase legal research family, which includes Full Court Press, Law Street Media, and Docket Alarm. The podcast itself is a joint effort between HB and our friends at Law Street Media. If you have comments or wish to participate in one our projects please drop me a note at Editor@LitigationConferences.com.
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Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
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He began his career as a litigator focusing on consumer financial services litigation and defense of regulatory claims against chartered and non-chartered financial institutions, finance entities, and money services business. In the wake of the fiscal crisis, he began working with financial institutions, state-licensed lenders money transmitters, non-traditional lenders, check cashers, and mortgage brokers on issues of regulatory compliance.
Brad is a Certified Anti-Money Laundering Specialist (CAMS) by ACAMS and a Certified Regulatory Compliance Manager (CRCM) by the American Bankers Association. He also serves as an expert witness of matters relating to financial regulations and compliance.
He received his JD, magna cum laude, from the University of South Carolina School of Law and his BA in Political Science and History, cum laude, from Furman University. Brad is also the FinTech advisor on the Editorial Advisory Board of the Journal on Emerging Issues in Litigation.