WASHINGTON, D.C. – U.S. Sens. John Kennedy (R-La.) and Bob Menendez (D-N.J.) today announced the introduction of bipartisan legislation that will extend protections against fraudulent and unauthorized transactions to small businesses. The Small Business Fraud Protection Act will extend the period small businesses have to report fraudulent transactions without being held liable from 24 hours to 60 days. According to CNBC, cybercrime has become one of the fastest growing forms of criminal activity, with 43% of cybercrimes aimed at small businesses.
“Small businesses are the backbone of our economy in Louisiana,” said Sen. Kennedy. “They employ 53% of our private sector workforce. Unfortunately, we’re not protecting these economic engines from fraud like we should. We only give businesses 24 hours to report suspected financial wrongdoing by cybercriminals. We’re giving the criminal the upper hand. That changes with this bill.”
“The small mom and pop shops along New Jersey’s Main Streets keep our economy alive and flourishing,” said Sen. Menendez. “Whether it’s a shop along one of our boardwalks or in one of our bustling downtown districts, small businesses deserve to be protected from fraud. After one of my constituents brought this issue to my attention several months ago, I knew something had to be done to better protect small businesses. I’m proud to introduce this commonsense piece of legislation and look forward to it becoming law.”
The Electronic Fund Transfer Act (EFTA) currently protects individual consumers from unauthorized electronic activity by allowing consumers to report fraud up to 60 days after the suspicious activity. Small businesses, however, are not protected under the EFTA and only have 24 hours to report fraud without being held responsible for the entire unauthorized transaction. The Small Business Fraud Protection Act levels the playing field by extending the same fraud protections afforded to individuals under the EFTA’s consumer liability section to include small businesses.
The bill is inspired by a real-life experience. Benjamin Zinckgraf, president of Zinckgraf Electrical Contractors, LLC, a small business based in Mt. Arlington, N.J., noticed a nearly $100 unauthorized transaction in his business checking account. When Mr. Zinckgraf contacted his bank and filed a fraud report, he was told that since he didn’t report it within 24 hours of the transaction, they were unable to conduct an investigation and he would be held liable for the cost. He contacted Sen. Menendez’s Newark office to see if current laws could be changed to better protect small business owners.
“The Small Business Fraud Protection Act is a move in the right direction. It will help protect our assets against the rise of cybercrime. At minimum it will give small businesses adequate time to report an issue, which is very much needed for busy Americans,” said Benjamin Zinckgraf. “I would like to thank Senator Menendez and his dedicated team for pushing this piece of legislation through. It’s always good to know our politicians are on our side.”
“Small businesses are a growing and increasingly profitable target of cybercriminals, and bank account hacks cost small businesses on-average $32,020 per incident. It is a huge oversight that the banking accounts of America’s smallest businesses aren’t fully protected against fraud and online theft,” said National Small Business Association President and CEO Todd McCracken. “This important legislation will close that loophole.”
"Small businesses deserve the same protections from fraud and unauthorized transactions as consumers," said Amanda Ballantyne, Executive Director of the Main Street Alliance. "Extending the Electronic Fund Transfer Act's consumer protections to small businesses will give small businesses the time needed to identify and act against fraud, an important resource as cyber security and other financial threats are on the rise."
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