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

nytimes.com

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

#21

Post by valuearb »

toomuchtodo wrote: post #11
valuearb wrote: post #8

Early Warning is owned by a consortium of major banks. Supposedly during development of the apps, if any one bank wanted a feature the team basically had to implement it. Allegedly the team wasn’t allowed to push out the ship date or refuse new features, their only lever was adding more resource. Any wonder why it shipped months late and with the most horrific reviews I’ve ever seen for a mobile app? My guess is fixi…

Fixing problems might not be easy, but as you mention, Early Warning is owned by a consortium of large US banks. Compared to PayPal, Stripe, and other non bank chartered institutions, their resources are effectively unlimited. Those problems are going to get fixed eventually. Wells Fargo was fined a billion dollars [1] and will continue to operate as an ongoing business. This is a road bump. [1] https://www.npr.org/s…

They have lots of, but not infinite resources. Their structure and leadership Dooms any attempt to make a good product. They can’t even agree on reasonable fraud prevention rules criss banks.

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

#22

Post by metei »

RSZC wrote: post #18
toomuchtodo wrote: post #11

Earlier quoted context omitted.

Fixing problems might not be easy, but as you mention, Early Warning is owned by a consortium of large US banks. Compared to PayPal, Stripe, and other non bank chartered institutions, their resources are effectively unlimited. Those problems are going to get fixed eventually. Wells Fargo was fined a billion dollars [1] and will continue to operate as an ongoing business. This is a road bump. [1] https://www.npr.org/s…

Throwing infinite money and developers at something does not make a good product. Source: I work for a SaaS aimed primarily at large banks, most of which attempted to build our product themselves before giving up and signing with us.

Just curious, what does your SaaS do? Additionally, I've come to believe that even the most forward thinking banks and credit unions don't understand tech one bit, based on how poorly written most of their software is.

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

#23

Post by toomuchtodo »

RSZC wrote: post #18
toomuchtodo wrote: post #11

Earlier quoted context omitted.

Fixing problems might not be easy, but as you mention, Early Warning is owned by a consortium of large US banks. Compared to PayPal, Stripe, and other non bank chartered institutions, their resources are effectively unlimited. Those problems are going to get fixed eventually. Wells Fargo was fined a billion dollars [1] and will continue to operate as an ongoing business. This is a road bump. [1] https://www.npr.org/s…

Throwing infinite money and developers at something does not make a good product. Source: I work for a SaaS aimed primarily at large banks, most of which attempted to build our product themselves before giving up and signing with us.

> Throwing infinite money and developers at something does not make a good product.

Of course not. But it gives them more time to try and more attempts, where your runway is limited. You would eventually run out of funds if you don't find product market fit. They will not run out of funds, ever.

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

#25

Post by gwbas1c »

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.

Because the banks are trying to do something to replace cash. No one will ever find me if I pay for a fraudulent transaction with cash!

They could probably use some kind of reputation system to warn that a transaction may be fraudulent... But let's get real for a minute. You need to take some responsibility when you're making a purchase to make sure that the other party is going to come through. When it comes to concert tickets, doesn't Ticketmaster already offer services to allow people to transact in tickets?

Edit: One thing the banks could do, is differentiate between a person-to-person transfer, and a merchant requesting payment. There could be some kind of fraud restitution system when the payment is sent via a Merchant's request for payment. If someone asks you to send money without the normal merchant system then you know that it could be a scam. The banks could always warn that the person to person payment system is like putting cash in an envelope and cannot be refunded if there is fraud.

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

#26

Post by btbuilder »

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 often used to withdraw money than deposit. These payment services offer an extra level of authentication and authorization that does not appear to be easily accessible in the traditional banking sector.

Meanwhile, in my experience, in the UK sharing your account number is primarily used for other people doing a personal transfer to you. The institutions that can withdraw money directly from your bank account are limited to those in the Direct Debit system that has some vetting procedures and guarantees similar to what you would get in a credit card agreement[1]. This significantly reduces the chance of fraud, even with incidents like when Jeremy Clarkson printed his acct # in a newspaper on purpose [2].

[1] https://www.directdebit.co.uk/DirectDebitExplained/pages/dir...

[2] https://www.theguardian.com/money/2008/jan/07/personalfinanc...

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

#27

Post by 21 »

gwbas1c wrote: post #25
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.

Because the banks are trying to do something to replace cash. No one will ever find me if I pay for a fraudulent transaction with cash! They could probably use some kind of reputation system to warn that a transaction may be fraudulent... But let's get real for a minute. You need to take some responsibility when you're making a purchase to make sure that the other party is going to come through. When it comes to conc…

The article gave the example of a guy sending money to his mother's phone number, but somehow someone else registered that number and the bank refused initially to refund him because the transaction was authorized by him.

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

#28

Post by lotsofpulp »

elvirs wrote: post #12

I noticed that one of the issues with Zelle is that people have accounts at multiple banks that all support Zelle but they use only 1 phone number connected to their banking apps. So sometimes when I send money from my chase mobile banking app to my friend's number who also has chase mobile banking app, the money actually ends up going to his bank of america account because he uses the same phone number on bank of am…

In my experience, Zelle doesn't let you concurrently link a single phone number to multiple accounts.

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

#29

Post by rkho »

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 read this comment and the first thing that it reminded me of was @patio11's post on contacting banks after the Equifax breach, and so I was about to dig it up to post as a comment when I realized who the GP was :)

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

#30

Post by bradleyjg »

arkades wrote: post #5
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…

Please elaborate, what is regulation E?

https://www.consumerfinance.gov/eregulations/1005
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