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Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

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Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#51

Post by ljlolel »

ben0x539 wrote: post #45
isanengineer wrote: post #36

It's not just fraud you need to worry about. Here's a horror story for you. A few years back I was moving to a city for graduate school and needed to rent an apartment. A friend of mine toured the place and when we decided to rent the landlord asked if we could send him the security deposit using Zelle. I sent the deposit using his contact information, but he never received it. I spent three weeks being passed back a…

> I also found that Zelle is basically just a front-end for the existing ACH Direct Deposit system. [...] > > tl;dr do not ever use Zelle. I can't figure out how to do ACH transfers to friends with my credit union, and I've been told Zelle is the solution for that. I guess I should stick to Venmo?

Yes

Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#52

Post by paulocal »

cuteboy19 wrote: post #31

What do the scams actually look like?

This happened to a friend of mine. She had listed a mattress with bed for sale on FB marketplace. Someone reached out and bought it and said would arrange pick up. They sent a screenshot of them Zelleing her. After a few minutes they reached out and told her they changed their mind because they cant pick it up and if they can Zelle them back. She did thinking it just hadn't hit her account yet. $1800 down the drain.

Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#53

Post by lolinder »

costco wrote: post #37
ct520 wrote: post #34

Earlier quoted context omitted.

Low transaction limits? I regularly send $xx,xxx through zelle. Guess I got to up my game..

Do you have a business account? I have a $1500/day limit. Looking it up it seems like for popular banks it tops out at $2500/day, and some go as low as $500/day.

How privileged is it to say that a $1500 loss is "hardly worth noting"? Median take home pay is under $45k, so that's more than half of the median paycheck gone in a single mistake.

Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#54

Post by ISO-morphism »

ben0x539 wrote: post #45
isanengineer wrote: post #36

It's not just fraud you need to worry about. Here's a horror story for you. A few years back I was moving to a city for graduate school and needed to rent an apartment. A friend of mine toured the place and when we decided to rent the landlord asked if we could send him the security deposit using Zelle. I sent the deposit using his contact information, but he never received it. I spent three weeks being passed back a…

> I also found that Zelle is basically just a front-end for the existing ACH Direct Deposit system. [...] > > tl;dr do not ever use Zelle. I can't figure out how to do ACH transfers to friends with my credit union, and I've been told Zelle is the solution for that. I guess I should stick to Venmo?

In the US, Zelle vs. Venmo is comparable to debit card vs. credit card. With Zelle/debit, you're basically mailing cash - it might get lost in transit, your money is gone right away. With Venmo/credit, there's a middleman with a big pile of cash that assumes the risk of money being in-flight, and usually eats fraud/errors as a cost of doing business in exchange for selling data about your spending to advertisers.

Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#55

Post by ianburrell »

isanengineer wrote: post #36

It's not just fraud you need to worry about. Here's a horror story for you. A few years back I was moving to a city for graduate school and needed to rent an apartment. A friend of mine toured the place and when we decided to rent the landlord asked if we could send him the security deposit using Zelle. I sent the deposit using his contact information, but he never received it. I spent three weeks being passed back a…

BTW, the solution for problems like this is complain to CFPB. Banks are afraid of CFPB and complaint will help solve problems.

Zelle has their own instant transfer system, and banks settle up overnight. My understanding is that there isn't ACH transaction for each transfer. Banks have less visibility into Zelle.

I hope FedNow kills Zelle. That should be better integrated. I think Venmo and other payment apps will stick around cause offer useful app.

Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#56

Post by isanengineer »

CalChris wrote: post #42
isanengineer wrote: post #36

It's not just fraud you need to worry about. Here's a horror story for you. A few years back I was moving to a city for graduate school and needed to rent an apartment. A friend of mine toured the place and when we decided to rent the landlord asked if we could send him the security deposit using Zelle. I sent the deposit using his contact information, but he never received it. I spent three weeks being passed back a…

I use Zelle all the time but with people I know. In fact, I can't remember where my check book is. I use Apple Pay all the time and I use an actual credit card about once a month. I use cash at one place, my taco truck of choice. And for the record, I've never touched bitcoin. I've used PayPal and Venmo but I don't see their utility now and prefer Apple Pay. All of these modern tools have their benefits and risks. I…

Agreed. I'm being hyperbolic when I say "do not ever use Zelle". I'm sure it's fine for passing money between friends. It's just that my version of the $40 lesson had a few more zeros on the end, and so stings a bit more.

For me I only use Venmo because that's what most people in social circles use. If they used Cash App or Apple Pay, I'd use those instead.

Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#57

Post by fallingknife »

godzillabrennus wrote: post #5
costco wrote: post #4

Due to Zelle's low transaction limits the amount lost in Zelle scams is hardly worth noting. Every bank already has a warning page before you use Zelle telling people what to look for in scams but based on this report it appears people are ignoring it. The losses from investment scams are much more worrying. I think all consumer bank accounts should require a mandatory two hour anti scam educational video before any…

That’s an elitist world view / statement. More than half of Americans have less than $500 in savings: https://www.gobankingrates.com/saving-money/savings-advice/n...

Whenever I see that it's always less than $x in a savings account which would include me. My net worth is high 6 figures and I have 50k ish of CC availability. So completely meaningless.

Edit: ok this one says it's a survey. But the results are that overall 58% don't have 500 in savings, but young people are actually doing better with only 39% of 18-24 year olds having less than 500. I'm not buying that.

Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#58

Post by NovemberWhiskey »

lolinder wrote: post #48
NovemberWhiskey wrote: post #32

Earlier quoted context omitted.

But a payment as part of a fraud is often an nauthorized payment. This is what people don't realize. An authorized payment is one that you agreed to make; if you didn't get what you expected in return, that doesn't make the payment unauthorized. Banks have no legal obligation to refund authorized payments, any more than they have obligations to refund people who took cash out of ATMs that they lost as part of a fraud…

The third bullet point on the first page says that the kind of fraud involved includes hacked accounts, which is the most classic type of unauthorized payment: > Banks are not repaying customers who contest “unauthorized” Zelle payments – potentially violating federal law and CFPB rules. Zelle claims to have a “zero liability policy” for cases in which a bad actor gains access to a consumer’s Zelle account and uses i…

That number doesn't really tell you anything. I mean, 23% of people admit to committing friendly fraud via credit card chargebacks.

Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#59

Post by isanengineer »

crazygringo wrote: post #40
isanengineer wrote: post #36

It's not just fraud you need to worry about. Here's a horror story for you. A few years back I was moving to a city for graduate school and needed to rent an apartment. A friend of mine toured the place and when we decided to rent the landlord asked if we could send him the security deposit using Zelle. I sent the deposit using his contact information, but he never received it. I spent three weeks being passed back a…

You should write that up as an Op-Ed or contact some journalists to use it as part of a story. You've got a lot of details in there that are definitely not common knowledge and would be of wide interest.

Thanks, but I don't think I know enough about this to speak about it on the pubic record. My experience is based on remembering what random customer service reps said a few years ago and a bunch of reddit and forum posts. For example, I don't know if Zelle is literally just direct deposit--if it was how did they freeze my transaction for 3 weeks?

But I do get the sense that of all the payment platforms, Zelle is uniquely risky because of the way it's set up. I do with a journalist would look at it from that angle rather just from the "wow there's a lot of fraud here". It seems to be that the banks are incentivized just to get have this product out here to undercut the competition from digital payment platforms, but have absolutely no incentive to make it a functional or safe platform.

Re: Consumers defrauded on Zelle are left high and dry by the banks that created it [pdf]

#60

Post by steelframe »

For anyone extolling the virtues of credit cards as the ultimate payer-friendly solution, my "exhibit A" is a vendor who charged my card and then put a freeze on actually shipping the product. Then they tried calling me while my phone didn't have a signal. Then they sent me an email saying their "verification" department couldn't reach me and to let them know when they can call. I replied telling them when they could call. They didn't call.

So I called them and sat on hold until someone finally picked up and told me that my order was flagged for some reason. After I confirmed my address (?), they seemed to confirm my order and then hung up. I still haven't gotten any confirmation that my item shipped yet.

In general I try to avoid ordering from Amazon, but if I had done that instead, I would have my item in my hands right now. Instead I had to waste my time playing phone tag, and I'm still wondering whether or when they'll actually ship my item. All because the vendor is apparently super-averse to credit card fraud and would rather push me to Amazon for future purchases than take whatever chance they'd be taking by sending me what they've already charged me for.

I'll have to be calling them again after the weekend to see if they've actually sent it. If they haven't, I'll tell them to cancel my order. And then I'll have to wait for them to refund the charges. If they don't, then I'll have to make another call to my bank to reverse the charges.

All the while, I still don't have my item. So if you don't pay for fraud in lost cash, you're definitely paying the overhead of vendors trying to avoid being "stuck holding the bag" by throwing arbitrary verification processes in your face, introducing delays and possibly leading to you needing to make multiple phone calls to resolve problems while being left without the thing you need.

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