By Michael B. Cohen
Vice President of Global Operations
The internet has ushered in an era of increased convenience and expedited payments. However, it’s also created easier means for fraudulent players to concoct schemes and abscond funds from customers on payment platforms.
Even though there is a certain risk of fraud with any payment method, a U.S. Senate report has identified Zelle as ground zero for an increasing number of financial frauds. More troubling is that the banks that partly own Zelle seem reluctant to take responsibility for customer losses.
A Chargeback Double Standard? Credit Cards Versus Zelle
There seems to be a double standard – one for credit cards and another for online payment platforms. People who notice unauthorized charges on their credit card, for example, can expect to get these refunded by the issuing bank once the charges have been proven fraudulent.
However, the report issued by Senator Elizabeth Warren of Massachusetts found that only a small percentage of customers have been compensated for funds stolen on Zelle.
Sen.Warren requested data from four banks connected with Zelle and found that out of 192,878 customer claims worth $213.8 million between 2021 and the first months of 2022, just 3,500 customers were reimbursed for losses on Zelle. Among cases where there was hard evidence of unauthorized charges, just 47% of customers received refunds.
Zelle Fraud: Are Banks Passing the Buck?
Zelle, founded in 2017, is a popular peer-to-peer payment platform, similar to Paypal and Venmo. Around 1,700 banks and credit unions use the service. However, the report brings to light the risks involved in using Zelle.
Although the Senate report is clear about the problems in redressing customer concerns, it’s apparent that banks and Zelle’s parent company, Early Warning Services, have been reluctant to acknowledge the issue or take responsibility for addressing customer claims.
For instance, according to Yahoo Finance, Early Warning Services claims that 99.9% of Zelle transactions go smoothly without complaint, which seems unlikely, given the fraud report.
According to the Electronic Fund Transfer Act, banks are required to reimburse customers who lose money to fraud. However, banks argue that it is becoming increasingly difficult to distinguish actual customer complaints from those that are fraudulent themselves.
However, the Senate report indicates that banks may be required to be more accountable for fraud cases on Zelle, and the Consumer Protection Bureau is stepping up efforts to put Zelle under increased scrutiny.
What Should Zelle Fraud Victims Do?
This all may be good news for Zelle users who are concerned about the increase in theft and fraud on the platform, but what about the people who are currently trying to get the banks and Zelle to respond to their claims?
People who have lost money to fraud need intelligence reports to bolster their claims and convince banks and authorities to get involved. MyChargeBack experts generate detailed reports that make your claim stand out from the rest and can be the right tool for tracking down your funds.
MyChargeBack Will Investigate Your Fraud Case
If you have lost money to financial fraud, talk to the MyChargeBack team. Our crypto investigations will provide evidence to bolster your claim.
MyChargeBack has developed working relationships with law enforcement agencies worldwide, has extensive knowledge and experience with crypto tracking, and can improve your prospects of getting your funds back.