You Just Got Scammed, Your Bank Doesn't Care
Banks fight to avoid liability in scams involving Zelle
The peer-to-peer payment system Zelle - where customers can send money to each other through their banks - is sometimes associated with fraud and scams.
That is, scammers encourage users to send money via Zelle - and then, the money disappears and no goods and services are provided.
This is NOT the same thing as using a credit card or your bank’s debit card to send money. When you use those methods (or other online payment processors), there are some basic fraud protections. You generally can get your money returned if you can establish a transaction was fraudulent.
Not so with Zelle.
Reports suggest that fraud involving money sent by Zelle often does not result in money being returned to the ripped-off consumer.
One might think this would concern banks.
But it doesn’t.
Instead, JP Morgan Chase is threatening to sue the Consumer Financial Protection Bureau (CFPB) for attempting to enforce some key fraud protections in order to safeguard Zelle users.
JPMorgan Chase may sue the Consumer Financial Protection Bureau if the agency issues an enforcement action against the bank over transfers of funds through peer-to-peer payments platform Zelle.
Why don’t banks want these consumer protections? They own Zelle - so they can facilitate transactions using Zelle and avoid the financial impacts of covering the cost of fraud:
JPMorgan is one of seven banks with an ownership stake in Zelle, alongside Bank of America, Wells Fargo, PNC, Truist, U.S. Bank, and Capital One.
Some lawmakers have expressed frustration:
“Zelle and the banks that own it have failed to implement adequate safeguards and reimbursement policies to make consumers whole when they fall victim to scams and fraud,” (Sen. Richard) Blumenthal said in a statement Friday. “Our measure takes bold action where Zelle’s efforts at self-regulation have fallen short, ensuring that instant payments do not automatically result in instant losses for consumers.”
Chase and the other big banks continue to act in ways that make it clear they are not that concerned about their customers:
