BY BROOKS YOUNG
New Hampshire Attorney General John Formella opened July with a warning for New Hampshire residents: be vigilant about fraud and scams. The attorney general’s message came the same day a 25-year-old Massachusetts woman was indicted for scamming three New Hampshire senior citizens out of $60,000.
With scams and fraud on the rise, it is good to see our leaders focus on the issue. As they tackle the problem, however, our leaders must pursue solutions that actually protect consumers and crack down on crooks. This is especially true for our leaders in Congress like Senator Maggie Hassan, who sits on the Senate’s Permanent Subcommittee on Investigations, which is looking into fraud and scams on peer-to-peer payment platforms, including Zelle.
If the public remarks of some Senators are any indication, the subcommittee may be preparing to issue recommendations that could do New Hampshire businesses more harm than good.
Peer-to-peer payment apps have become central to anything from splitting dinner with friends to paying at a small, or even one-person, business. Unfortunately, the ease of these apps also means that scammers can target people easily from anywhere in the world. But instead of putting more resources into stopping scammers directly, regulators appear to be looking to hold the platforms liable.
Platforms like Zelle that transfer money directly between bank accounts already put a strong focus on security and help safeguard against fraud. And as a result of transferring money directly between accounts, there are no additional fees or waiting periods for funds to be transferred, which can be a game-changer for small business operations.
It is also worth noting that over 95% of the financial institutions offering Zelle are community banks or credit unions. If they are held liable for fraud using these peer-to-peer payment services, they may have to charge for the transfers — meaning small businesses may have to move to larger, national banks to maintain free access to Zelle or other payment platforms as a result.
Of course, the payment services have obligations to protect their customers that should not be ignored. The best of them already do. Zelle provides alerts reminding customers to be aware of deceptive activities. It reimburses consumers for unauthorized transactions where accounts have been compromised, and it recently began offering additional reimbursements for some scams where a fraudster pretends to be a trusted voice. Other peer-to-peer services should follow Zelle’s lead.
These platforms are becoming increasingly popular and widespread adoption makes transactions seamless and efficient. In what is becoming a cashless world, we need to ensure that people are safe from fraud and have access to move their money around without waiting or paying a fee. There’s no magic bullet to doing this, but some of the proposed solutions would do more harm than good.
Instead of targeting the payment services, the Senate and others in Washington, D.C., should go after the actual criminals. Congress should give law enforcement more resources to find, capture and prosecute fraudsters, encourage agencies to better educate consumers, and crack down on the misuse of technology that allows crooks to impersonate others.
Brooks Young is a past president of the Greater Derry Londonderry Chamber and a former technical coordinator for the Palace Theatre and REX Theatre in Manchester. Young is a well-known musician who has performed for many years including before presidents and governors.
