Commentary: Big Tent Ideas

STEPHEN MOORE: For Whom The Zelle Tolls: Why Dumping Biden Era Case Against Popular Service Was Correct

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One of the more baffling lawsuits in the final days of the Biden administration was the complaint against Zelle – the popular money transfer system. The Consumer Finance Protection Board (CFPB) argued that the service was ripping off consumers. But that was quite a stretch given that Zelle is virtually a free service for customers.  

Now that the Trump administration has all but closed down the CFPB, this is the first of many lingering lawsuits that needed to be tossed. Which, thankfully, the administration did on Tuesday.

In its short inglorious decade-long history, the CFPP harassed businesses with hundreds of millions of dollars of frivolous complaints which 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 wanted to strangle Zelle with red tape and lawsuits remains a mystery. 

Zelle provides a money transfer program mostly run through banks.The 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 anti-fraud policeman. 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.

 In other words, the very people who 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 people who have benefited most from the infrastructure for electronic transactions are the lowest income Americans who are unbanked or underbanked.  

 Zelle’s record on rooting out fraud is exemplary. Some 99.95% of its payments are sent without a report of scams. 

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

Stephen Moore is a senior fellow at the Heritage Foundation and a co-founder of Unleash Prosperity.  His latest book is “The Trump Economic Miracle.”

Stephen Moore is a senior fellow at the Heritage Foundation and a cofounder of Unleash Prosperity.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.