5 ms·

There is no way to do what the senators want without undermining the entire point of Zelle. If there are chargebacks then there needs to be a dispute resolutio

by costco 3y ago

There is no way to do what the senators want without undermining the entire point of Zelle. If there are chargebacks then there needs to be a dispute resolution system and higher fees to compensate. These are authorized payments, banks are already obligated to reimburse all unauthorized payments.

wmf 3y ago
Yep, people are about to learn that those credit card fees actually buy you something.
- spandextwins 3y ago
  Credit card fees, like insurance rates, are staggeringly high to cover all the crime and fraud. Just hope someday those companies don’t have to have their own law enforcement teams to go after the criminals who cause all that fraud and crime.
  - arcticbull 3y ago
    Most of the fee goes back to customers in the form of cash back and loyalty points. The networks only get some 0.3% ish, the rest goes to the issuing banks. That's why you can get a no-annual-fee 2% cash back card like the Citi Double Cash. Debit cards that fall under the Durbin amendment to the Dodd-Frank act only charge 0.05% + $0.21
    - asu_thomas 3y ago
      [dead]
- phpisthebest 3y ago
  Well several years ago I was a merchant, and every time I was victim of a fraud the Credit Card companies took their money from my payments, so those fee's did not cover the fraud at all. Not only was I out the product, I was also out the Money, and fee's a double whammy. So I 100% disagree that the " credit card fees actually buy you something" because all they do it push the liability on to the merchant. Visa and Mastercard is not covering the costs of fraud
  - taway32r41 3y ago
    I think the general idea is credit cards take care of the card holders. They've certainly always have taken care of me. And merchants are supposed to take care of themselves by raising prices. The system is certainly not perfect but seems to mostly work.
freejazz 3y ago
I don't think you are getting the Senate report's point. It's titled "How Consumers Defrauded on Zelle are Left High and Dry by the Banks that Created It" When you say it would undermine the entire point of Zelle, I don't think that's the Senate's concern. I think the Senate's concern is that banks have created a money transfer system where they eschew their legal obligation to reimburse all unauthorized payments.
- NovemberWhiskey 3y ago
  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.
  - lolinder 3y ago
    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 it to make unauthorized payments, and the Electronic Fund Transfer Act (EFTA) and the Consumer Financial Protection Bureau’s (CFPB) “Regulation E” require that the banks repay customers when funds are illegally taken out of their account without authorization. But the data provided by the banks revealed that they reimbursed consumers for only 47% of the dollar amount of cases in which customers reported unauthorized payments on Zelle in 2021 and the first half of 2022.
    - NovemberWhiskey 3y ago
      That number doesn't really tell you anything. I mean, 23% of people admit to committing friendly fraud via credit card chargebacks.
stephenhuey 3y ago
I see other comments here saying it's intended to be digital cash, but as a programmer it makes no sense that we Zelle users cannot find out the identify and ultimate destination on the other side of the funds transfer - it's also annoying that the USA doesn't have a simple bank transfer system like many other countries do. About 4 years ago, I got scammed when I sent a payment to a local preschool and later found out the preschool did not receive those funds. Someone was illicitly reading their emails and and also had control of a discarded email address the school no longer used and routed my Zelle payment to the bank account associated with that. The school suspected a former employee, but nothing ever came of it even though there was a police report and I also filed a complaint with the feds. A police officer called me several months later to say the case had ended up in his lap but he didn't see a way to do anything about it. Chase had multiple meetings with me, and they even knew which bank the funds had been transferred to, so it made no sense to me that there was nothing that could be done to retrieve the funds. Eventually the whole saga just ended with no resolution, and I figured if that person was so desperate they probably needed the money more than me. Anyone have more insight into the underlying mechanics and why we can't confirm recipient identity/account as a Zelle user?
- arcticbull 3y ago
  > ... it's also annoying that the USA doesn't have a simple bank transfer system like many other countries do. FedNow is here and live.
  - kasey_junk 3y ago
    Lots of other countries offer direct to consumer rails. I think fednow is an absolute improvement over ACH but it’s still way behind some of the peer payment systems out there.
  - FireBeyond 3y ago
    For a couple of initial test institutions in limited cases. It's coming, but it's not really "here and live" fully yet.
toss1 3y ago
>>Higher fees to compensate Really? My bank was charging me $40/month just to have the service active to use it for occasional payments. I did not even realize that using it once "subscribed" me to the service, and fortunately was able to have months of bogus fees reversed. Plus, it was not even actually all that convenient. Just skim the report. It id damning. One thing I learned a long time ago: Never mistake a bank (or banker) for a friend, no matter how much they try to market their "friendliness". They may sometimes be necessary or even useful, but they are never your friend when it comes down to it.
mindslight 3y ago
The entire foundation of the US banking system is directly opposed to the claimed point of Zelle. Which is why any business that wants to convert the very "soft" money of the banking system into anything harder (eg cryptocurrency) inevitably needs to plan for and eat losses. I'm somewhat sympathetic with your point as applied to fraudulently induced yet properly authorized payments. But it's utterly untenable when talking about unauthorized payments from someone else gaining access to a bank web interface and things like that - the security posture of banks and the security properties they expose to customers would have to change drastically to change that. And frankly assuming a system already has to deal with the second kind, dealing with the first carries basically the same burden.
deleted 3y ago
[deleted]

by costco 3y ago

wmf 3y ago

Yep, people are about to learn that those credit card fees actually buy you something.

spandextwins 3y ago
Credit card fees, like insurance rates, are staggeringly high to cover all the crime and fraud. Just hope someday those companies don’t have to have their own law enforcement teams to go after the criminals who cause all that fraud and crime.
- arcticbull 3y ago
  Most of the fee goes back to customers in the form of cash back and loyalty points. The networks only get some 0.3% ish, the rest goes to the issuing banks. That's why you can get a no-annual-fee 2% cash back card like the Citi Double Cash. Debit cards that fall under the Durbin amendment to the Dodd-Frank act only charge 0.05% + $0.21
  - asu_thomas 3y ago
    [dead]
phpisthebest 3y ago
Well several years ago I was a merchant, and every time I was victim of a fraud the Credit Card companies took their money from my payments, so those fee's did not cover the fraud at all. Not only was I out the product, I was also out the Money, and fee's a double whammy. So I 100% disagree that the " credit card fees actually buy you something" because all they do it push the liability on to the merchant. Visa and Mastercard is not covering the costs of fraud
- taway32r41 3y ago
  I think the general idea is credit cards take care of the card holders. They've certainly always have taken care of me. And merchants are supposed to take care of themselves by raising prices. The system is certainly not perfect but seems to mostly work.

freejazz 3y ago

I don't think you are getting the Senate report's point. It's titled "How Consumers Defrauded on Zelle are Left High and Dry by the Banks that Created It" When you say it would undermine the entire point of Zelle, I don't think that's the Senate's concern. I think the Senate's concern is that banks have created a money transfer system where they eschew their legal obligation to reimburse all unauthorized payments.

NovemberWhiskey 3y ago
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.
- lolinder 3y ago
  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 it to make unauthorized payments, and the Electronic Fund Transfer Act (EFTA) and the Consumer Financial Protection Bureau’s (CFPB) “Regulation E” require that the banks repay customers when funds are illegally taken out of their account without authorization. But the data provided by the banks revealed that they reimbursed consumers for only 47% of the dollar amount of cases in which customers reported unauthorized payments on Zelle in 2021 and the first half of 2022.
  - NovemberWhiskey 3y ago
    That number doesn't really tell you anything. I mean, 23% of people admit to committing friendly fraud via credit card chargebacks.

stephenhuey 3y ago

I see other comments here saying it's intended to be digital cash, but as a programmer it makes no sense that we Zelle users cannot find out the identify and ultimate destination on the other side of the funds transfer - it's also annoying that the USA doesn't have a simple bank transfer system like many other countries do. About 4 years ago, I got scammed when I sent a payment to a local preschool and later found out the preschool did not receive those funds. Someone was illicitly reading their emails and and also had control of a discarded email address the school no longer used and routed my Zelle payment to the bank account associated with that. The school suspected a former employee, but nothing ever came of it even though there was a police report and I also filed a complaint with the feds. A police officer called me several months later to say the case had ended up in his lap but he didn't see a way to do anything about it. Chase had multiple meetings with me, and they even knew which bank the funds had been transferred to, so it made no sense to me that there was nothing that could be done to retrieve the funds. Eventually the whole saga just ended with no resolution, and I figured if that person was so desperate they probably needed the money more than me. Anyone have more insight into the underlying mechanics and why we can't confirm recipient identity/account as a Zelle user?

arcticbull 3y ago
> ... it's also annoying that the USA doesn't have a simple bank transfer system like many other countries do. FedNow is here and live.
- kasey_junk 3y ago
  Lots of other countries offer direct to consumer rails. I think fednow is an absolute improvement over ACH but it’s still way behind some of the peer payment systems out there.
- FireBeyond 3y ago
  For a couple of initial test institutions in limited cases. It's coming, but it's not really "here and live" fully yet.

toss1 3y ago

>>Higher fees to compensate Really? My bank was charging me $40/month just to have the service active to use it for occasional payments. I did not even realize that using it once "subscribed" me to the service, and fortunately was able to have months of bogus fees reversed. Plus, it was not even actually all that convenient. Just skim the report. It id damning. One thing I learned a long time ago: Never mistake a bank (or banker) for a friend, no matter how much they try to market their "friendliness". They may sometimes be necessary or even useful, but they are never your friend when it comes down to it.

mindslight 3y ago

The entire foundation of the US banking system is directly opposed to the claimed point of Zelle. Which is why any business that wants to convert the very "soft" money of the banking system into anything harder (eg cryptocurrency) inevitably needs to plan for and eat losses. I'm somewhat sympathetic with your point as applied to fraudulently induced yet properly authorized payments. But it's utterly untenable when talking about unauthorized payments from someone else gaining access to a bank web interface and things like that - the security posture of banks and the security properties they expose to customers would have to change drastically to change that. And frankly assuming a system already has to deal with the second kind, dealing with the first carries basically the same burden.

deleted 3y ago

[deleted]