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As many people know, it's convenient to send and receive money to people you know using apps on your phone. But many of those apps have fraudsters, which is why the CEOs of some big banks face questions from Congress. Here's NPR's David Gura.
DAVID GURA, BYLINE: Several senators want to know what retail banks are doing to prevent people from getting scammed using Zelle. Like Venmo or PayPal, it's a popular way for people to transfer money using their smartphones. And Zelle is owned by many of the big banks represented at this week's hearings. On Thursday, Democratic Senator Elizabeth Warren said banks market it as a fast, safe and easy way to send and receive money.
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ELIZABETH WARREN: But Zelle is not safe. Last year alone, Zelle users were defrauded out of about a half a billion dollars - that we know of.
GURA: Fraudsters convince Zelle users to send them money using the service. And then, Warren says, the victims have little to no recourse. No one can say how much fraud is committed with Zelle, which is used by millions of Americans who sent nearly half a trillion dollars through the network last year. And that was Warren's point. She told the CEOs she's disappointed with how little data they've provided on fraud complaints.
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WARREN: I'm sorry. Your credibility right now is riding at zero.
BILL DEMCHAK: We will...
SHERROD BROWN: Senator Rounds...
WARREN: You created the perfect weapon for criminals...
BROWN: Senator Warren...
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WARREN: ...To use, and they have used it, and you have not stood behind your customers.
GURA: Executives said there's less fraud than on rival networks, and they committed to get Warren more data. Later, PNC CEO Bill Demchak made another promise.
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DEMCHAK: We'll fix Zelle.
GURA: Peer-to-peer payments represent the future of banking. And members of the House and Senate had lots of questions about what's known as fintech, or financial technology, along with crypto. On Wednesday, Jamie Dimon, the CEO of JPMorgan Chase, said he's a major skeptic of cryptocurrencies like Bitcoin.
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JAMIE DIMON: They are decentralized Ponzi schemes, and the notion that's good for anybody is unbelievable.
GURA: Dimon pointed out two-thirds of crypto's total value, about $2 trillion, evaporated in the last year, and it's also used for criminal activity. And he downplayed the significance of crypto again on Thursday, when Republican senator and Bitcoin booster Cynthia Lummis of Wyoming asked him about it. The senator noted that JPMorgan is experimenting with its own cryptocurrency to settle transactions faster. The executives applauded themselves for how their banks have performed during the pandemic. And several of them, including Dimon, weighed in on the Federal Reserve's fight against high inflation.
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DIMON: The most important thing is to avoid stagflation. Stagflation is the most damaging to every part of society, every industry, all income levels.
GURA: Dimon signaled his approval of the Fed's aggressive interest rate hikes, saying it's critical the Fed moves fast to get inflation under control.
David Gura, NPR News, New York.
(SOUNDBITE OF MARLEY CARROLL'S "STARLINGS") Transcript provided by NPR, Copyright NPR.
