Banking: Banks explore reimbursing customers who send money to scam Zelle accounts


U.S. banks have been slow to reimburse people for so-called authorized transactions on the Zelle payments network, which is jointly owned by big banks, but they are now exploring ways to make some exceptions.

With scammers able to mimic a bank’s customer-service line on caller ID, banks are looking at ways to revise the procedures for refunding customers within their banking network, according to a report Monday by The Wall Street Journal.

The bank that houses a scammer’s account would return the money to the victim’s bank under a system being discussed by the seven banks that own Early Warning Services LLC , the parent company of Zelle. Those are: JPMorgan Chase
Wells Fargo & Co
Bank of America Corp.
Capital One Financial Corp.
PNC Financial Services Group Inc.
Truist Financial Corp.

andUS Bancorp.

Some banks already pay back victims who were tricked into transferring cash to scammers’ bank accounts.

Now banks are negotiating the standardization of refund procedures and the sharing of liability within the Zelle network, according to the Wall Street Journal report, which cited people familiar with the matter. The new rules could go into effect as early as 2023, the newspaper reported.

The program is not expected to apply to customers seeking refunds for goods or services they say they didn’t receive, or to those whose payments went astray when they used an incorrect account number.

Banks continue to reimburse accounts for unauthorized transactions. Customers who discover unauthorized transactions must notify their bank within 60 days after receiving a statement with the unauthorized transaction.

Also read: Why Zelle moves twice as much money as Venmo

Spokespeople for JPMorgan Chase, Bank of America and Wells Fargo referred questions to Early Warning Services LLC.

A spokesperson for Early Warning Services LLC declined to comment on the Wall Street Journal report but provided a statement saying that Zelle has devoted significant time and resources to protecting consumers since it launched five years ago. According to the company, only about 0.01% of Zelle payments have generated reports of fraud or scams. The statement also noted that Zelle does not provide purchase protection to its users.

“Part of our work includes collaborating with our financial institution participants to evolve and enhance our network-wide rules to enhance the value of Zelle for all consumers,” Early Warning Services said in the emailed statement.

At hearings on Capitol Hill in September, bank CEOs were grilled on Zelle refund practices, among other topics.

Also read: Senators drill down on Zelle reimbursements, inflation and ‘uber-woke’ policies in bank CEO hearing

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