Sen. Elizabeth Warren (D-Mass.) says she wants answers from Wells Fargo & Co (NYSE:WFC) on the Zelle fraud.
What Happened: Warren made her comments on Twitter and shared a New York Times article highlighting an “alarming pattern” of Zelle fraud observed by her in data provided by Wells Fargo.
Warren tweeted Wells Fargo has a “long history of ripping off customers," adding that she was releasing data showing how Zelle fraud and scams affecting Wells Fargo customers are much bigger than what other big banks had reported. “I want answers."
.@WellsFargo has a long history of ripping off customers. Today, I'm releasing new data showing @Zelle fraud and scams affecting Wells’ customers have doubled and are 2x higher than what other big banks have reported to Congress. I want answers.https://t.co/UBOKLRx6nH
— Elizabeth Warren (@SenWarren) October 13, 2022
The Massachusetts senator, who sits on Senate’s Banking Committee, told Wells Fargo CEO Charles Scharf in a letter — published by the Times — last week that the bank did not cooperate with her investigation of the Zelle platform dating back to April 2022.
“As a member of Zelle, we’ve seen the number of transactions double in just three years, yet in 2022, 99.94% of our customer transactions occurred without incident," a Wells Fargo spokesperson told Benzinga.
"We don’t believe the numbers in a recent report are done on a comparable basis, and therefore the analysis is misleading and inaccurate. Based on the data we’ve seen, our Zelle fraud and scam rates are consistent with the industry and have never been twice as high compared to other banks.”
U.S. Securities and Exchange Commission representatives declined to comment on the matter.
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Why It Matters: Zelle is owned by Early Warning Services, LLC — a consortium of seven banks that includes Wells Fargo.
“Wells Fargo's rates of reported fraud and scams are extraordinarily low and comparable to the Zelle network as a whole, where rates of reported fraud and scams represent less than 0.1% of all transactions,” said Early Warning in a statement.
Lenders that complied with Warren’s request — Bank of America, PNC and U.S. Bank — together reported 135,000 Zelle frauds or scams in 2021, accounting for 0.03% of their Zelle transactions, according to Times.
Banks and credit union customers reportedly sent 1.8 billion payments worth $490 billion through Zelle in 2021.
Warren told Scharf in her letter that Wells Fargo reported a rate more than twice as high, however, the Senator did not reveal the precise claims rate because the bank asked the information to be kept confidential.
A Wells Fargo spokesperson told the Times that 99.94% of its customer transactions occurred without incident — the publication construed that it meant that 0.06% of the bank’s Zelle transactions do lead to a fraud or scam claim.
In her letter, Warren said she would send the information on Wells Fargo’s Zelle claims to regulators, which include the Federal Reserve. In 2021, Warren had asked for the break up for Wells Fargo.
Price Action: On Thursday, Wells Fargo shares closed 4.5% higher at $42.33 in the regular session and rose 0.8% in extended trading, according to data from Benzinga Pro.
