Bankers must make consumer safety a priority as they develop a new, real-time electronic payments system, Consumer Financial Protection Bureau Director Richard Cordray told a financial conference on Thursday (Nov. 20).
In a lunchtime keynote speech at the annual conference of ACH network The Clearing House, Cordray said existing laws and rules won’t be enough to protect consumers. “Merely having rules and safeguards is not enough,” Cordray told the audience of bankers and other payment operators. “They need to be policed and enforced aggressively if they are to have their intended effect of actually protecting consumers,” he said, according to American Banker.
He used the example of online payday lender Hydra Group, which was sued by the CFPB in September. At least one consumer, who had taken out a short-term loan from a different lender and set up ACH repayments, discovered that Hydra had also deposited money into her account and debited repayments without her consent, all through ACH.
Cordray said creation of a real-time ACH network was “an urgent priority,” but also called for more transparency in the ACH system, so consumers will have a clearer understanding about matters such as how long it takes transactions to clear.
He specifically said that a faster ACH system should provide consumers with quicker access to money deposited; include real-time information on fees and how they affect a consumer’s account status; offer protections from unauthorized debits; and not be accessible only by the wealthy.