Current:Home > MarketsZelle customers to get refunds for money lost in impostor scams, report says-InfoLens
Zelle customers to get refunds for money lost in impostor scams, report says
View Date:2024-12-23 16:02:05
Banks that participate in Zelle, a peer-to-peer payment service, have begun refunding money to victims of fraud amid pressure from lawmakers.
Since June 30, more than 2,000 financial firms have begun reversing transfers their customers made to scammers who impersonated officials from government agencies, banks or other service providers in so-called impostor scams, Zelle's parent company, Early Warning Services (EWS), told Reuters.
Banks have historically resisted calls to reimburse victims of these types of scams, arguing that federal rules only require them to issue refunds for money taken out of customers' bank accounts by hackers, as opposed to fraudulent payments customers are duped into authorizing, the wire service noted.
The new policy offers consumer protection services "well above existing legal and regulatory requirements," Ben Chance, chief fraud risk officer at EWS, told Reuters.
EWS has not publicly disclosed how much money it plans to return to customers. The company also has neither provided a timeline for refunds, nor offered instructions on how fraud victims can request them. It remains unclear whether banks will retroactively reverse any fraudulent transactions that occurred before the new policy went into effect.
Seven large banks, including Bank of America, JPMorgan Chase and Wells Fargo, launched Zelle in 2017 to compete with PayPal, Venmo and other payment apps.
EWS did not immediately respond to a request for comment.
Reports of widespread fraud
Financial institutions' about-face comes roughly a year after the New York Times and lawmakers raised concerns about the prevalence of fraud on Zelle and other payment applications.
According to an investigation led by Sen. Elizabeth Warren and other lawmakers, Zelle users lost roughly $440 million to various types of fraud in 2021 alone. Another report from Sen. Warren's office, which cites data collected by four banks between 2021 and the first half of 2022, found that banks reimbursed less than a quarter of Zelle customers who fell victim to any type of fraud, while just roughly 2% of impostor scam victims were reimbursed.
Impostor fraud accounted for $2.6 billion in losses in 2022, making it the most widely reported scam last year, Federal Trade Commission data shows.
In addition to recovering funds from scammers and reimbursing impostor scam victims, Zelle has implemented other policy changes to combat fraud on its network, Reuters reported. For example, lenders on Zelle have implemented a tool that flags risky transfers, such as those involving recipients that have never processed transactions on the payments network. The change has lowered the number of frauds on the platform, Chance told Reuters.
"We have had a strong set of controls since the launch of the network, and as part of our journey we have continued to evolve those controls... to keep pace with what we see is going on in the marketplace," Chance told Reuters.
- In:
- Elizabeth Warren
- Federal Trade Commission
- Fraud
veryGood! (3166)
Related
- Florida education officials report hundreds of books pulled from school libraries
- Kroger to pay up to $1.4 billion to settle lawsuits over its role in opioid epidemic
- Opinion: High schoolers can do what AI can't
- House GOP seeks access to Biden's vice presidential records from Archives, seeking any information about contacts with Hunter Biden or his business partners
- Opinion: NFL began season with no Black offensive coordinators, first time since the 1980s
- Phoenix has set another heat record by hitting 110 degrees on 54 days this year
- FASHION PHOTOS: Siriano marks 15 years in business with Sia singing and a sparkling ballet fantasy
- Ashton Kutcher and Mila Kunis apologize for ‘pain’ their letters on behalf of Danny Masterson caused
- KFC sues Church's Chicken over 'original recipe' fried chicken branding
- Special election in western Pennsylvania to determine if Democrats or GOP take control of the House
Ranking
- Darren Criss on why playing a robot in 'Maybe Happy Ending' makes him want to cry
- Vatican holds unprecedented beatification of Polish family of 9 killed for hiding Jews
- In Aryna Sabalenka, Coco Gauff faces powerful, and complicated, opponent in US Open final
- Trump Organization offloads Bronx golf course to casino company with New York City aspirations
- Eminem, Alanis Morissette, Sheryl Crow, N.W.A. and Janet Jackson get Songwriters Hall of Fame nods
- Gunmen attack vehicles at border crossing into north Mexico, wounding 9, including some Americans
- Nationals owner Mark Lerner disputes reports about Stephen Strasburg's planned retirement
- Crashing the party: Daniil Medvedev upsets Carlos Alcaraz to reach US Open final
Recommendation
-
Garth Brooks wants to move his sexual assault case to federal court. How that could help the singer.
-
Slow AF Run Club's Martinus Evans talks falling off a treadmill & running for revenge
-
How to make yourself cry: An acting coach's secrets for on command emotion
-
Ben Shelton's US Open run shows he is a star on the rise who just might change the game
-
School workers accused of giving special needs student with digestive issue hot Takis, other abuse
-
Alito rejects Democrats' demands to step aside from upcoming Supreme Court case
-
‘The world knows us.’ South Sudanese cheer their basketball team’s rise and Olympic qualification
-
The world is still falling short on limiting climate change, according to U.N. report