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The banks aren't going to make you whole when withdraw a thousand bucks from the ATM and send it to someone. These denied refunds follow the same principle. The

The banks aren't going to make you whole when withdraw a thousand bucks from the ATM and send it to someone. These denied refunds follow the same principle. There are warnings all over every zelle implementation I've used saying that using zelle is like using cash, don't send it to someone you don't know, etc. But people still do it anyways. Btw crypto is worse on this in every way and there is no system that actually solves this problem. I wonder if it is even possible to solve.

criddell 4y ago
Is Zelle really like using cash? It seems closer to an electronic transfer than withdrawing dollar bills. With cash they have no way to know what I'm doing with the money but with a transfer, they know a little bit more and so they have more responsibilities (IMHO).
- asdfasgasdgasdg 4y ago
  It is the intentional decision of zelle to be like using cash in terms of rollback guarantees. This is so that payees can accept it like cash. There's no way to balance the scales -- the payment system that can be rolled back has its own issues.
  - criddell 4y ago
    If they can't rollback the transaction, Zelle should reimburse customers itself.
    - SpicyLemonZest 4y ago
      We have other payment systems like credit cards which work that way. The inevitable consequences are that permissions to receive payments are tightly locked down, and the network charges fees to help cover the cost of fraudulent transactions.
      - criddell 4y ago
        > the network charges fees to help cover the cost of fraudulent transactions I don't see a problem with that. If fraud is rare, the fee would be small. If fraud is not rare, then there's a problem they should fix. For every 100 Zelle transactions, how many are due to fraud or scams? Maybe three or four? Then the fee should be 3-4%.
  - brigade 4y ago
    That decision is as exactly as legally binding as the signs on trucks disavowing liability for falling debris. Banks might be trying to pretend Zelle isn't covered by Regulation E, but I haven't heard any good argument for why it doesn't apply, other than arguments similar to yours that they simply don't want it to.
    - asdfasgasdgasdg 4y ago
      People are welcome to challenge the banks in court. It will be no skin off my back if they win. But I guess the banks have good reason that believe that they can defend their practices successfully. If not it will be the end of Venmo, cash app, and zelle -- or at least the free transfer features of those apps.
      - brigade 4y ago
        The "good reason" is that it's an extension of how banks have always treated fraudulent debits until you show knowledge of the Reg E dispute process, so it makes it outside of first-level customer support. And it won't be the end of free electronic transfers, it'll just mean acknowledging that those transfers aren't any more final than writing a check.
    - NovemberWhiskey 4y ago
      Banks are not arguing that Zelle isn't covered by Regulation E. Regulation E talks about liability for "unauthorized transactions". Those are transfers "from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer". If you initiated the transfer but were misled into doing so or provided the wrong payment information or whatever, it's still an authorized transaction from Regulation E's perspective; so you are still liable for it. The only exception is if you were induced by force to initiate the transfer.
      - brigade 4y ago
        Authorization isn't "I authorize my account to be debited $X", it's "I authorize my account to be debited $X by Party Y" Errors under Reg E include any instance where Party Y is not who receives the funds, including wrong payment info.
twblalock 4y ago
For large transactions this is somewhat solved by escrow companies. In the end it all has to come down to trust. If all transactions were easy to reverse, we would see the opposite problem: scammers who pay people money and the. demand it back, claiming fraud.
- asdfasgasdgasdg 4y ago
  Yep. Happens in the credit card world all the time. Porn is a good example of a business that has a lot of trouble functioning due to fraudulent chargebacks.
  - twblalock 4y ago
    That is in fact the real reason some credit card companies won't let you pay for porn. Amex was preventing it for years before it was a PR/wokeness issue. The scenario is, someone pays for porn, their spouse sees it on the bill and gets really angry, and the other person says it wasn't me, it must have been fraud! So they file a chargeback.
livueta 4y ago
> Btw crypto is worse on this in every way In a technical sense you're correct; in both cases the transactions are effectively irreversible. That said, I think there is an important difference: Everyone (well, kinda) knows that a crypto transaction is irreversible; that's basically the point. Because of this, it is expected and normal to layer on extra systems to cope with the risk of not having an authority to dispute stuff to. Consider darknet markets: they use escrow and reputation systems to protect both parties. But everyone (well, kinda, in the same sense as the above) also knows traditional financial institutions are "safe" and that transactions are reversible. That false sense of security means other security/resolution methods aren't considered, so when the centralized authority has a bad day the end user is out of luck. But isn't an escrow system just another centralized authority? Sure, but at least I can choose what escrow system I want to interact with. The banking cartel behind Zelle doesn't afford me the same degree of choice, and using small credit unions isn't a panacea either because they farm out everything complicated to one or another of the payment cartels. Quality of escrow system is an important discriminator when choosing a DNM; I wish I could assess various traditional financial institutions' likeliness to rip me off as effectively. If centralized financial institutions want to act like crypto in terms of irreversibility, fine, but I think the scale of the problem described in TFA indicates that some "are you suuuuuuuuuuuuure you want to send money to Joe Blow" popups in the app aren't enough to overcome that aegis of "this is a safe institution" floating around in the public consciousness. I see it as more a problem of false advertising than anything else, really. Copy from the landing page of their site: > Zelle® works between U.S.-based banks. Which means, even if you bank somewhere different than your friends and family do,1 you can still use Zelle® to safely send and receive money straight from your banking app. > safely Obviously it's not a legal doc or anything, but I'd argue the service is both explicitly and implicitly casting itself as akin to a bank-provided service like a credit card, not something as wild west as cash.

criddell 4y ago

Is Zelle really like using cash? It seems closer to an electronic transfer than withdrawing dollar bills. With cash they have no way to know what I'm doing with the money but with a transfer, they know a little bit more and so they have more responsibilities (IMHO).

asdfasgasdgasdg 4y ago
It is the intentional decision of zelle to be like using cash in terms of rollback guarantees. This is so that payees can accept it like cash. There's no way to balance the scales -- the payment system that can be rolled back has its own issues.
- criddell 4y ago
  If they can't rollback the transaction, Zelle should reimburse customers itself.
  - SpicyLemonZest 4y ago
    We have other payment systems like credit cards which work that way. The inevitable consequences are that permissions to receive payments are tightly locked down, and the network charges fees to help cover the cost of fraudulent transactions.
    - criddell 4y ago
      > the network charges fees to help cover the cost of fraudulent transactions I don't see a problem with that. If fraud is rare, the fee would be small. If fraud is not rare, then there's a problem they should fix. For every 100 Zelle transactions, how many are due to fraud or scams? Maybe three or four? Then the fee should be 3-4%.
- brigade 4y ago
  That decision is as exactly as legally binding as the signs on trucks disavowing liability for falling debris. Banks might be trying to pretend Zelle isn't covered by Regulation E, but I haven't heard any good argument for why it doesn't apply, other than arguments similar to yours that they simply don't want it to.
  - asdfasgasdgasdg 4y ago
    People are welcome to challenge the banks in court. It will be no skin off my back if they win. But I guess the banks have good reason that believe that they can defend their practices successfully. If not it will be the end of Venmo, cash app, and zelle -- or at least the free transfer features of those apps.
    - brigade 4y ago
      The "good reason" is that it's an extension of how banks have always treated fraudulent debits until you show knowledge of the Reg E dispute process, so it makes it outside of first-level customer support. And it won't be the end of free electronic transfers, it'll just mean acknowledging that those transfers aren't any more final than writing a check.
  - NovemberWhiskey 4y ago
    Banks are not arguing that Zelle isn't covered by Regulation E. Regulation E talks about liability for "unauthorized transactions". Those are transfers "from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer". If you initiated the transfer but were misled into doing so or provided the wrong payment information or whatever, it's still an authorized transaction from Regulation E's perspective; so you are still liable for it. The only exception is if you were induced by force to initiate the transfer.
    - brigade 4y ago
      Authorization isn't "I authorize my account to be debited $X", it's "I authorize my account to be debited $X by Party Y" Errors under Reg E include any instance where Party Y is not who receives the funds, including wrong payment info.

twblalock 4y ago

For large transactions this is somewhat solved by escrow companies. In the end it all has to come down to trust. If all transactions were easy to reverse, we would see the opposite problem: scammers who pay people money and the. demand it back, claiming fraud.

asdfasgasdgasdg 4y ago
Yep. Happens in the credit card world all the time. Porn is a good example of a business that has a lot of trouble functioning due to fraudulent chargebacks.
- twblalock 4y ago
  That is in fact the real reason some credit card companies won't let you pay for porn. Amex was preventing it for years before it was a PR/wokeness issue. The scenario is, someone pays for porn, their spouse sees it on the bill and gets really angry, and the other person says it wasn't me, it must have been fraud! So they file a chargeback.

livueta 4y ago

> Btw crypto is worse on this in every way In a technical sense you're correct; in both cases the transactions are effectively irreversible. That said, I think there is an important difference: Everyone (well, kinda) knows that a crypto transaction is irreversible; that's basically the point. Because of this, it is expected and normal to layer on extra systems to cope with the risk of not having an authority to dispute stuff to. Consider darknet markets: they use escrow and reputation systems to protect both parties. But everyone (well, kinda, in the same sense as the above) also knows traditional financial institutions are "safe" and that transactions are reversible. That false sense of security means other security/resolution methods aren't considered, so when the centralized authority has a bad day the end user is out of luck. But isn't an escrow system just another centralized authority? Sure, but at least I can choose what escrow system I want to interact with. The banking cartel behind Zelle doesn't afford me the same degree of choice, and using small credit unions isn't a panacea either because they farm out everything complicated to one or another of the payment cartels. Quality of escrow system is an important discriminator when choosing a DNM; I wish I could assess various traditional financial institutions' likeliness to rip me off as effectively. If centralized financial institutions want to act like crypto in terms of irreversibility, fine, but I think the scale of the problem described in TFA indicates that some "are you suuuuuuuuuuuuure you want to send money to Joe Blow" popups in the app aren't enough to overcome that aegis of "this is a safe institution" floating around in the public consciousness. I see it as more a problem of false advertising than anything else, really. Copy from the landing page of their site: > Zelle® works between U.S.-based banks. Which means, even if you bank somewhere different than your friends and family do,1 you can still use Zelle® to safely send and receive money straight from your banking app. > safely Obviously it's not a legal doc or anything, but I'd argue the service is both explicitly and implicitly casting itself as akin to a bank-provided service like a credit card, not something as wild west as cash.