At issue is whether banks make it easy for scammers to open accounts
of ConsumerAffairs
Complaints about Zelle scams are on the rise and the issue may be about to get more attention from federal regulators.
Zelle is a peer-to-peer payment app owned by seven large banks and offered to bank customers to send money. If a hacker breaks into an account and makes an unauthorized transfer, the bank usually makes good and refunds the money.
But when a scammer tricks a Zelle user into transferring the money, thats a different matter. The banks position is this: the user made the transfer, they just happened to send the money to a criminal.
But, what the banks see as an open and shut case of personal responsibility may look different to regulators. The Wall Street Journal reports regulators such as the Consumer Financial Protection Bureau (CFPB) are taking a closer look at how banks are handling customers money on the payment platform.
Broad investigation
The Journal cites people familiar with the matter who say the investigation is broad and is looking at how the banks respond when customers dispute transactions made through Zelle.
Juanita, a Chase customer from New Port Richey, Fla., says she was scammed out of $1,000 when she sent the money through Zelle to what she thought was a rental agent.
I have all documentation to prove that this, in fact, was a scam case, Juanita wrote in a ConsumerAffairs review. I filed a police report, filed a claim through Zelle and also filed fraud with Chase. Nothing was done. My case was taken to their escalation department and they told me there was nothing more that they can do.
Thats because, from the banks perspective, Juanita authorized the transfer. But regulators are now looking closely at whether banks have done enough to block scammers from opening accounts since scammers need an account in order to receive the money.
Do banks try to weed out scammers?
The sources tell the Journal that the CFPB is looking at how banks qualify customers when they open accounts. The agency reportedly wants to know the steps banks take to vet new customers.
For their part, banks have said its unreasonable to expect them to be able to prevent all the scams taking place on the platform. They ask how they are supposed to know whether an authorized transaction is being initiated by the victim of a scam.
Zelle has recently required member banks to reimburse Zelle users in some cases of scam transactions. Banks have also stepped up warnings about sending money to strangers.
Whether banks will be required to do more remains to be seen.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-08-08 11:06:02
