Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud • Hacker News Board

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#61

Post by mindslight » Mon, Apr 23, 2018, 1:52 AM UTC

btbuilder wrote: post #26

doesnt_know wrote: post #15

Here in kiwi-land, a bank transfer from one individual or business to another is considered the most basic of banking services and all banks support it. Here are some screenshots from the KiwiBank web interface, (but it's similar for all banks): https://i.imgur.com/ug9VU5t.png https://i.imgur.com/HRsyQoN.png There are no fees related to this unless you start doing international transfers, it's just part of the servic…

I think this has to do with a fundamental difference in how sensitive account number and routing numbers are in the US compared with other international financial systems I have used. In the US, if someone has your account number and routing number you can attempt all sorts of fraud via the eCheck system. People and companies are wary about giving out their account numbers. Providing an account number here is more of…

The two are highly related, but one is not directly responsible for the other.

The root of of what keeps the "pull" system entrenched is the regime where whomever originates a fraudulent transaction into the network is responsible for dealing with the mess.

This explains why banks have explicit daily transfer limits for their bank to bank transfer feature (and online bill pay) outgoing and incoming, but will let arbitrarily high debit transactions post to your account from elsewhere. You click dispute, your bank sends back an ACH reject, and then the originating bank needs to figure out wtf happened.

This also explains why local banks ACH initiation limits are obscenely low - same risk profile as online-only banks, but they'd rather not have to clean up messes (whereas the online banks are basically forced to be in that business).

This creates a stable system of course, whereby it's in no individual bank's interest to start encouraging push transfers - they'd just have to potentially deal with even more fallout for no gain.

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#62

Post by briandear » Mon, Apr 23, 2018, 2:32 AM UTC

Of course not everyone has an Apple device, but person-to-person Apple Pay is really slick and, based on my amateur analysis, very secure.

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#63

Post by meesterdude » Mon, Apr 23, 2018, 2:34 AM UTC

haha I actually tried using Zelle a few days ago - "oh look, the banks are joining the future! lets try this". WRONG. Super convoluted and couldn't get it to work in the end, even after calling customer service.

Paypal was 30 seconds.

Zelle is Helle

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#64

Post by panarky » Mon, Apr 23, 2018, 3:04 AM UTC

eckmLJE wrote: post #45

panarky wrote: post #43

There needs to be a very large, very prominent warning on every transaction: "ONLY SEND MONEY TO PEOPLE YOU KNOW." "IF YOU SEND MONEY TO A SCAMMER, ZELLE WILL NOT HELP YOU GET YOUR MONEY BACK." Zelle is not PayPal. There is no dispute resolution service if the seller on Craigslist doesn't deliver and stops responding to your messages. Don't use Zelle to send money to strangers.

Venmo is the same way. A friend of mine accepted payment for a piece of hardware through Venmo. My friend handed over the hardware in person to the buyer once the payment was "in" my friend's wallet and he had initiated the cash out, but before the money had actually cleared into his bank account. Once he and the buyer parted ways, the payment was canceled due to a claim of fraud by the card's owner, and my friend's…

> Venmo is the same way.

If Venmo reverses payment due to claims of fraud, then this is pretty much the exact opposite of Zelle. That makes Venmo more like PayPal, with a dispute resolution process.

Zelle doesn't care if your counterparty is a scammer. If you initiated the payment, the money is gone.

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#65

Post by jrs95 » Mon, Apr 23, 2018, 3:09 AM UTC

Venmo itself has had a long history of the same issues. The main problem here for Zelle is that they should have seen this coming and handled it a bit better.

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#66

Post by ianburrell » Mon, Apr 23, 2018, 3:43 AM UTC

panarky wrote: post #64

eckmLJE wrote: post #45

Earlier quoted context omitted.

Venmo is the same way. A friend of mine accepted payment for a piece of hardware through Venmo. My friend handed over the hardware in person to the buyer once the payment was "in" my friend's wallet and he had initiated the cash out, but before the money had actually cleared into his bank account. Once he and the buyer parted ways, the payment was canceled due to a claim of fraud by the card's owner, and my friend's…

> Venmo is the same way. If Venmo reverses payment due to claims of fraud, then this is pretty much the exact opposite of Zelle. That makes Venmo more like PayPal, with a dispute resolution process. Zelle doesn't care if your counterparty is a scammer. If you initiated the payment, the money is gone.

There are two different kinds of fraud. One is where there is fraudulent payment like from account being taken over. Venmo and Zelle can reverse those transactions. The other kind is where purchase is fraudulent. Venmo and Zelle don't offer any protection for purchases or sales. It is only credit cards and equivalent that offer purchase protection.

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#67

Post by closeparen » Mon, Apr 23, 2018, 4:44 AM UTC

21 wrote: post #16

> The catch is that the bank, like all the others that use Zelle, only considers transactions fraudulent if the customer did not authorize them. How can the banks be so short-sighted? Soon a lot of people will hear that Zelle is not secure and they will avoid using it.

Fraud protection and dispute resolution are what you pay the credit card interchange fee for. What, did you think they were suddenly going to give away that service for free?

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#68

Post by CuriousCosmic » Mon, Apr 23, 2018, 5:34 AM UTC

staz wrote: post #58

btbuilder wrote: post #26

Earlier quoted context omitted.

I think this has to do with a fundamental difference in how sensitive account number and routing numbers are in the US compared with other international financial systems I have used. In the US, if someone has your account number and routing number you can attempt all sorts of fraud via the eCheck system. People and companies are wary about giving out their account numbers. Providing an account number here is more of…

What's the deal with you Americans and your magic numbers? So you have your Social Security Number that you can't give for fear of someone impersonating you, your Credit Card Number you cannot give for someone might steal from you and now you tell me you can't even give your bank account number. So you have all theses numbers you have to keep secret because they are the gateway to someone ruining your life, yet you s…

Yep. So many people are afraid of having a universal system for identifying (and tracking) us that they would much prefer many smaller broken systems used for impersonating us.

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#69

Post by CaptainZapp » Mon, Apr 23, 2018, 8:46 AM UTC

staz wrote: post #58

btbuilder wrote: post #26

Earlier quoted context omitted.

I think this has to do with a fundamental difference in how sensitive account number and routing numbers are in the US compared with other international financial systems I have used. In the US, if someone has your account number and routing number you can attempt all sorts of fraud via the eCheck system. People and companies are wary about giving out their account numbers. Providing an account number here is more of…

What's the deal with you Americans and your magic numbers? So you have your Social Security Number that you can't give for fear of someone impersonating you, your Credit Card Number you cannot give for someone might steal from you and now you tell me you can't even give your bank account number. So you have all theses numbers you have to keep secret because they are the gateway to someone ruining your life, yet you s…

Looks like IBAN has a hard time catching on in the US.

I never considered it a problem supplying my banking information to just about anybody who asks for it.

Re: Zelle, the Banks’ Answer to Venmo, Proves Vulnerable to Fraud

#70

Post by joncrane » Mon, Apr 23, 2018, 12:08 PM UTC

patio11 wrote: post #4

If you ever send money to A and it actually goes to B, and for some reason the bank doesn't fix that the first time you get in touch with them, I recommend getting off the phone and escalating to an on-dead-tree letter: Dear BigBank Legal Department: This is written notice under Regulation E that BigBank has processed the following electronic transaction in error: (Brief recitation of transaction details.) You are re…

I hope this method is still effective given who's in charge of the CFPB. I'm pretty sure they're responsible for enforcing Reg E for the largest banks (correct me if I'm wrong).