diff --git a/src/libxrpl/tx/transactors/token/MPTokenIssuanceCreate.cpp b/src/libxrpl/tx/transactors/token/MPTokenIssuanceCreate.cpp
index b38296f63b..69d7c1ef95 100644
--- a/src/libxrpl/tx/transactors/token/MPTokenIssuanceCreate.cpp
+++ b/src/libxrpl/tx/transactors/token/MPTokenIssuanceCreate.cpp
@@ -74,7 +74,7 @@ MPTokenIssuanceCreate::preflight(PreflightContext const& ctx)
 
         // Confidential amounts are encrypted so transfer rate is disallowed.
         if (fee > 0u && ctx.tx.isFlag(tfMPTCanConfidentialAmount))
-            return temMALFORMED;
+            return temBAD_TRANSFER_FEE;
     }
 
     if (auto const domain = ctx.tx[~sfDomainID])
diff --git a/src/libxrpl/tx/transactors/token/MPTokenIssuanceSet.cpp b/src/libxrpl/tx/transactors/token/MPTokenIssuanceSet.cpp
index b42e200010..0a4bf80e27 100644
--- a/src/libxrpl/tx/transactors/token/MPTokenIssuanceSet.cpp
+++ b/src/libxrpl/tx/transactors/token/MPTokenIssuanceSet.cpp
@@ -171,7 +171,7 @@ MPTokenIssuanceSet::preflight(PreflightContext const& ctx)
             // in the same transaction is not allowed.
             if ((transferFee.value_or(0) > 0u) &&
                 ((*mutableFlags & tmfMPTSetCanConfidentialAmount) != 0u))
-                return temMALFORMED;
+                return temBAD_TRANSFER_FEE;
         }
     }
 
diff --git a/src/test/app/ConfidentialTransfer_test.cpp b/src/test/app/ConfidentialTransfer_test.cpp
index 75c4f0b2cb..c9112d3b9f 100644
--- a/src/test/app/ConfidentialTransfer_test.cpp
+++ b/src/test/app/ConfidentialTransfer_test.cpp
@@ -1179,7 +1179,7 @@ class ConfidentialTransfer_test : public beast::unit_test::Suite
             mptAlice.create({
                 .transferFee = 100,
                 .flags = tfMPTCanTransfer | tfMPTCanConfidentialAmount,
-                .err = temMALFORMED,
+                .err = temBAD_TRANSFER_FEE,
             });
 
             // transferFee being 0 is allowed, even with tfMPTCanConfidentialAmount
@@ -1206,7 +1206,7 @@ class ConfidentialTransfer_test : public beast::unit_test::Suite
                 .account = alice,
                 .mutableFlags = tmfMPTSetCanConfidentialAmount,
                 .transferFee = 100,
-                .err = temMALFORMED,
+                .err = temBAD_TRANSFER_FEE,
             });
         }
 
@@ -1249,6 +1249,12 @@ class ConfidentialTransfer_test : public beast::unit_test::Suite
                 .transferFee = 100,
                 .err = tecNO_PERMISSION,
             });
+
+            // Setting transfer fee to 0 is allowed, but have no effect.
+            mptAlice.set({
+                .account = alice,
+                .transferFee = 0,
+            });
         }
     }