US Senators Call on Zelle to Fight Money Transfer Scams and Protect Consumers

Colin Thierry
Colin Thierry Writer
Colin Thierry Colin Thierry Writer

US Senators Bob Menendez, D-N.J. and Elizabeth Warren, D-Mass. have called on the company behind Zelle to do more to protect consumers from money transfer scams and help get money back into their accounts.

“This widespread fraud on money transfer apps has affected nearly 18 million Americans,” the lawmakers wrote in a letter on Tuesday to Zelle’s parent company, Early Warning Systems. “Given the rise of increasingly sophisticated scams on your platform and the widely documented difficulties consumers have faced in seeking relief from banks, we seek to understand the extent to which Zelle allows fraud to flourish and the steps your company is taking to increase consumer protection and help users recover lost funds.”

Early Warning Systems, LLC. is owned by seven of the U.S.’s largest banks, including Bank of America, Wells Fargo, J.P. Morgan Chase, Capital One, PNC, Truist, and U.S. Bank.

Early Warning Systems told reporters that it has received the letter and “will provide a response in due course.”

The senators said that Zelle has handled more than $490 billion in transactions in 2021, doubling its nearest competitor Venmo.

“Alarmingly, both your company and the big banks who both own and partner with the platform have abdicated responsibility for fraudulent transactions, leaving consumers with no way to get back their funds,” the lawmakers said. “Zelle’s biggest draw — the immediacy of its transfers — also makes scams more effective and a favorite of fraudsters, as consumers have no option to cancel a transaction even moments after authorizing it.”

“And banks have chosen to let consumers suffer, blaming them for authorizing fraudulent transactions,” they added.

The senators said the Consumer Financial Protection Bureau (CFPB) and the FDIC previously clarified that Regulation E of the Electronic Fund Transfer Act protected victims of fraudulent money transfers, including those who were induced into transferring the money themselves. They also cited an FDIC report from March “finding that the banks and the platform were both responsible for fraudulent electronic transfers through this regulation.”

In one case, a man lost $2,800 after being deceived into making a Zelle transfer after he received a text saying there were fraudulent transactions on his Wells Fargo account.

“Hindsight being 20/20, I see how stupid this sounds now but I was following the directions from the verified bank employee and felt confident that she had my best interest in mind,” he said. “Obviously that was false.”

Wells Fargo ended up refunding the money, but that usually doesn’t happen.

About the Author

About the Author

Colin Thierry is a former cybersecurity researcher and journalist for SafetyDetectives who has written a wide variety of content for the web over the past 2 years. In his free time, he enjoys spending time outdoors, traveling, watching sports, and playing video games.

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