PRIMER: A financial fraud crackdown won’t protect consumers from scams
WASHINGTON, D.C. – Today, the global consumer advocacy group Consumer Choice Center launched a policy primer to evaluate legislative solutions for combatting and alleviating the harm caused by payment scams and frauds.
This primer analyzes the Protecting Consumers From Payment Scams Act, and whether the liability remedies proposed would help combat consumer fraud and scams or would ultimately create unintended consequences for consumers that do not punish wrongdoers.
The primer includes key policy suggestions for legislators to help consumers avoid frauds and scams while demonstrating the errors that would come with expanded institutional liability:
- Shifting liability to financial institutions will ultimately backfire on consumers, leading to more expansive financial surveillance, higher costs due to more compliance and reimbursements, and a generally degraded consumer experience that eradicates the advantage of popular financial tech and banks.
- Consumer financial education is the most effective way to prevent scams.
- A national privacy law fostering innovation while protecting consumers
- Stiffer penalties for individuals committing frauds and scams
Yaël Ossowski, deputy director of the Consumer Choice Center, explains:
“Though scams and fraud are a persistent issue in the American economy, we should guard against the imposition of yet more costly and intrusive rules that will degrade the consumer experience and likely create more amenable conditions for bad actors to steal.
“Rather than creating a new liability between financial institutions that would have unintended consequences for consumers of all income levels, our existing laws should concentrate on finding and punishing fraudsters and scammers we can already catch,” said Ossowski.
“While we should commend legislators for attempting a solution to frauds and scams, we cannot accept the false promise that more scrutiny on those who follow and abide by the law will deter those who have so far evaded responsibility or punishment,“ concluded Ossowski.
The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva, Lima, Brasilia, and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.
Champion Innovation
Defend Portability
Allow Interoperability
Embrace Technological Neutrality
Avoid patchwork legislation
Promote strong encryption
