July 11th, 2022 by WCBC Radio
U.S. Senator Chris Van Hollen (D-Md.) joined Senators Bob Menendez (D-N.J.), Elizabeth Warren (D-Mass.), and Jack Reed (D-R.I.) alongside Senators Sherrod Brown (D-Ohio), Sheldon Whitehouse (D-R.I.), Bernie Sanders (I-Vt.), and Tammy Duckworth (D-Ill.) in pressing seven of the nation’s largest banks regarding widespread fraud on Zelle, their online peer-to-peer money transfer program.
“In 2021, consumers and businesses made 1.8 billion payments…through Zelle…[and p]ayment volumes have increased 49% year-over-year. As these payment networks have become ubiquitous, frauds and scams have proliferated,” wrote the senators to the seven banks that co-own Zelle’s parent company. “One of Zelle’s biggest selling points to consumers – the ability to immediately transfer money – makes the platform a “favorite of fraudsters” because consumers have no option to cancel a transaction, even moments after authorizing it…At least in the case of Zelle, the banks that participate in the network appear not to have provided sufficient recourse to their customers.”
The senators emphasized how in 2020 nearly 18 million Americans were defrauded through scams involving Zelle and other instant payment applications; yet, the banks that participate in the network appear not to have provided sufficient recourse to their customers.
“These scams are not isolated incidents. A Wells Fargo customer service representative told one consumer that ‘a lot of people are getting scammed on Zelle this way’ and ‘many people were getting hit for thousands of dollars.’ But the platform still provides weak consumer protections and participant banks do not provide sufficient relief to defrauded consumers,” added the senators. “Several customers who fell victim to scams were made whole only after contacting the press, suggesting that avoiding unwanted public scrutiny may be a significant factor in a decision to provide recourse to customers. In some cases, these customers had sterling decades-long relationships with the bank.”
