The news: Early Warning Services (EWS), the company behind Zelle and Paze, submitted a five-point plan to US financial regulators to combat fraud.
The recommendations emphasize the need for a collaborative approach across various sectors, including financial institutions (FIs), social media companies, telecom providers, and law enforcement, per a press release. And because FIs are often shouldering the primary burden of fraud losses—and blame, they want the firms that control where fraudsters’ initial contact takes place to play a bigger role in stopping bad actors.
By the numbers: EWS member banks have been catching flack for fraudulent Zelle transactions, including a now-halted lawsuit from the Consumer Financial Protection Bureau. And while Zelle maintains fraud makes up just 0.02% of its transactions, it’s an active target for fraudsters.
EWS said it screened over $10.8 trillion in payments in 2024, stopping approximately $3 billion in potential fraud. This demonstrates the immense scale of the problem and the constant threat FIs and their customers face.
Our take: While a multi-sector approach could be a good idea in theory, it may also deflect from each financial player’s responsibility to secure every transaction. If FIs want customers to trust that their money is safe with them, they can’t blame their partners for fraudulent transactions that customers use their mobile banking apps to make.
But clearly, the traditional siloed approach to combating fraud isn’t working against sophisticated criminal rings that operate across multiple platforms. This initiative represents a significant step toward a unified, multi-sector strategy—especially as customers continue to increase their mobile-to-mobile payments volume over the next few years.
This is our immediate perspective. We’re actively developing this story throughout the day with more research and data from the EMARKETER database. Our in-depth analysis will be included in our client-only Briefings. Non-clients can click here to get a demo of our full platform and coverage.
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