Pew Urges the Fed to Prioritize Consumer Protections in Future Instant Payments System
Letter warns proposed rule for new “FedNow” service leaves fraud risks unaddressed
On Sept. 1, The Pew Charitable Trusts submitted comments to the Federal Reserve Board regarding rule-making for the forthcoming “FedNow” instant payments service, which will allow individuals and businesses to send and receive payments at any time and complete those transactions within seconds, providing immediate access to funds.
According to the board’s proposed rule, “there is broad consensus within the U.S. payment community that, just as real-time services have become standard for other everyday activities, instant payment services have the potential to become widely used, resulting in a significant and positive impact on the U.S. economy.”
Pew’s letter pointed out that the proposal is essentially silent about the heightened risk of fraud or consumer scams associated with instant payments. Citing Pew’s 2020 report titled “Can Regulators Foster Financial Innovation and Preserve Consumer Protections?,” the letter urged policymakers, including the board, to make cohesive consumer protections and prevention of scams a core consideration of any new real-time or instant payments system or rule-making.