VIP EARLY ACCESS: Go Inside the First 100 Days of America's Remarkable Comeback...
Joe Biden Couldn't Answer This Question on The View
Jemele Hill: Transgenders in Women's Sports Is Like MLK Jr's Struggle for Civil...
Some of the Reactions to the New Pope Have Been Hilarious
Israel's 'Operation Giden's Chariots' Could Signal the End of the War in Gaza
Trump Wants to Dissolve These Three Agencies – A Federal Judge Won't Let...
Trump Just Pulled His Controversial Prosecutor Pick
Will AOC Run for President? Here's What Trump Thinks.
Sean Duffy Announces Plan to Overhaul the Transportation System
Trump Fires Off on Jerome Powell
The First American Pope in History Was Just Announced. Trump Just Responded.
Exposed: Scandal Over 'Sex Ed' Camp for Young Kids in Colorado
First American Pope in History Announced
Georgia College Student and Her Family Face Deportation After She Got Pulled Over...
Ohio Gov. DeWine Moves to Block State GOP From Endorsing Vivek Ramaswamy
OPINION

For Whom the Zelle Tolls

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
AP Photo/Mark Lennihan

One of the more baffling lawsuits in the final days of the Biden administration was the complaint against Zelle, the popular money transfer network. The Consumer Finance Protection Bureau argued that, despite Zelle's service being free, the network's users were being ripped off.

Advertisement

Now that the Trump administration has all but closed the CFPB down, this is the first of many lingering lawsuits that should be tossed out.

In its short, inglorious history, the CFPB harassed businesses with hundreds of millions of dollars of frivolous complaints that enriched trial lawyers while doing nothing of consequence to actually help consumers.

If the CFPB had really wanted to "protect" consumers, the agency would have sued the Biden administration for unleashing a 21% four-year inflation with its wild spending spree. But that never happened.

Why the CFPB and its former director Rohit Chopra want to strangle Zelle with red tape and lawsuits remains a mystery.

Zelle provides a money transfer program mostly run through banks. Users pay next to nothing for the service. Yet the government is looking this gift horse in the mouth.

The complaint against Zelle is that the service doesn't do enough to root out internet fraudsters. These are mostly foreign fraud cartels that prey on unsuspecting clients throughout the world.

But Zelle is not an antifraud police force. The entire concept of the service is that you pay nothing for the money transfer, but you also bear the risk of fraud. Zelle does some due diligence checks and gives warnings, but if you want full fraud protection, you pay for it by using other money transfer companies.

Zelle already reimburses consumers for fraudulent transactions more generously than required by law. If the CFPB suit were to succeed, the result would be higher fees for consumers, community banks, and credit unions.

Advertisement

In other words, the very people the CFPB is supposed to protect would be the victims here. If the service is harmful to customers, then why is it so wildly popular with American consumers and small businesses? Not only do nearly half of adults use its services, but so do 2,000 financial institutions.

The infrastructure for electronic transactions has benefited low-income Americans who are unbanked or underbanked most.

Zelle's record in rooting out fraud is exemplary. Some 99.95% of its payments are sent without a report of scams. Moreover, fraud rates in the banking sector, including online and card payment fraud, are not disproportionately lower than those associated with peer-to-peer systems like Zelle.

If the government wins this fight with Zelle, the users will pay more. That hardly sounds like a way to "protect" consumers.

Stephen Moore is a visiting fellow at the Heritage Foundation. He is also an economic advisor to the Trump campaign. His new book, co-authored with Arthur Laffer, is "The Trump Economic Miracle."

Join the conversation as a VIP Member

Recommended

Trending on Townhall Videos

Advertisement
Advertisement
Advertisement