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> Zelle has said that 99.9 percent of money transfers go through as users intended, without a fraud or scam report ... Zelle usage has grown significantly since

> Zelle has said that 99.9 percent of money transfers go through as users intended, without a fraud or scam report ... Zelle usage has grown significantly since its launch, from 247 million transactions in 2017 to 1.8 billion in 2021. Their defense is that they only process two million fraudulent transactions a year?

sib 3y ago
"Only two million reported fraudulent transactions per year" :)
deleted 3y ago
[deleted]
swatcoder 3y ago
That's the same defense used for all recent failings of Big Tech at scale: "Well, when you sell as many apples as we do, of course you'll sell a few billion rotten ones. You can't expect us to check them all at this volume!"
- jacquesm 3y ago
  Not really. Fraud is a function of all payment systems because of human nature, not because of the tech. You could implement all of this with paper and sliderules and there would still be fraudulent transactions.
  - LeifCarrotson 3y ago
    The difference is that in big tech, the fraud is expected because of the scale, it's an amoral faceless algorithm. If you had a human verifying each transaction, you could blame (or at least appeal to) the human.
    - jacquesm 3y ago
      That human would likely do much worse than the algorithms. This is a real problem and as far as I know there is no way to get this resolved because the main reason the algorithm is able to outperform the human is because it enables a larger volume and so you have more data to work with. This is the same reason why a PSP will always give you better fraud protection than rolling your own, they look at so much more data than you ever will that they will be able to better tell friend from foe. Fewer false positives and fewer false negatives. Still too much, but the theory is that in order to be able to detect fraud you will have to have some fraud!
      - thaumasiotes 3y ago
        > but the theory is that in order to be able to detect fraud you will have to have some fraud! That fails to argue that having any fraud is beneficial; if you have no fraud, there is no value in being able to detect fraud.
        jacquesm 3y ago
        Yes, but for that there would have to be no fraud. You can't know your error rate without having some known errors. Otherwise you may well be simply blind to the fraud that you do have but are not aware of. That fraud by itself is not beneficial goes without saying.
        thaumasiotes 3y ago
        That is true, but it also tends to make the original statement meaningless. Now you're saying that (1) "in order to detect fraud, you have to have some fraud", and (2) "everyone everywhere, with no exceptions, has some fraud". This means there is no requirement for being able to detect fraud that is not automatically satisfied by everyone. Why bother talking about a requirement that is automatically satisfied?
        jacquesm 3y ago
        Because it is the degree of fraud that you catch that matters. Every financial system has fraud. In the old days - I used to work at a bank - the banks knew that there was fraud, but usually they didn't have a really good grip on how many of their transactions were fraudulent and how much of that they caught. The limitations on human resources alone made this a losing battle. Just like any classification system a fraud control system has false positives, false negatives, true positives and true negatives. In an ideal version of such a system you have no false positives and false negatives. But that idealized version of that system (the one that perfectly classifies fraudulent transactions and non-fraudulent transactions) is static. It can't adapt to cases of fraud that it hasn't seen yet. Eventually a fraudulent transaction gets through. And that transaction if not detected timely but after the fact (so now there is some detected fraud, in the interval prior to its detection it was undetected fraud) will result in an update to the fraud detection system (probably it will need more than one example to be able to generalize from). Now the perfect system may start to generate false positives or false negatives on other transactions. Run the 'perfect' system for long enough and it will be like every other fraud control system, a certain fraction of fraud will get through and a certain fraction of good transactions will be marked as fraud. How low you can do this sustainably is an open question but there is a lot of money to be made by squeezing out the last little bits and so a lot of money is poured into these systems. The nasty bit is that many of the players in this space attempt to off-load their residual risk on others (such as merchants or consumers) and that gives them less of an incentive to do the best job they can. So that's why all of this is relevant. I hope I'm able to explain it clearly enough.
    - dymk 3y ago
      The difference is that in big tech, you can measure it in the first place. Are you really suggesting that that human-to-human systems have always had less fraud? Of course not, the fraud just wasn't logged and reported.
    - cdogl 3y ago
      “Big tech” is very far from the only sector where transactions can’t all be verified in person. The financial sector is one obvious case.
      - deleted 3y ago
        [deleted]
  - djbusby 3y ago
    Zelle wouldn't help fraud victims at all. Most other payment systems have some recourse.
IG_Semmelweiss 3y ago
A big portion of them happening now thanks to chatgpt. For example, my partner posted an item for sale in FB marketplace. The buyer said she couldnt pick up item, but her brother would. She could pay via Zelle, all she needed was an email & phone # . None of that seemed weird, so my partner agreed. The buyer then said she sent a Zelle payment. My partner got an email from "Zelle Pay" saying money was pending due to my partners account not being a business account. Luckily, we know zelle and didnt fall for it. The sender was a Gmail account. My partner must have been talking with a bot. 5 min later, another buyer showed up. She also could not pick up but her brother would. She was to pay via zelle. Be careful with FB marketplace. It's a mess now.
- Nursie 3y ago
  There's the exact same scam here in Australia, but using PayID instead of Zelle. I'm not sure there's a particular reason to think it's a bot or AI is there? It could just be a script and a call-centre type operation.
- tetromino_ 3y ago
  > None of that seemed weird In my experience, in a FB marketplace transaction where the buyer picks up the item, the buyer only pays after personally inspecting the item and (often) haggling a bit. Prepaying using Zelle for an unseen item is very weird.
  - sixothree 3y ago
    Yeah. If you're picking up the item in person, you can bring cash.
- gs17 3y ago
  That scam predates ChatGPT by a lot, it's not necessarily AI driven.
  - BoorishBears 3y ago
    It had nothing to do with ChatGPT, if anything ChatGPT would have let them come up with more unique messages
jacquesm 3y ago
Yes. VISA and MC are at many orders of magnitude above that in an absolute sense.
- phone8675309 3y ago
  Yes, and they have mechanisms for disputing fraudulent transactions with a method for restitution if the transaction is a scam.
  - djbusby 3y ago
    And Zelle did nothing. Now they might start
    - FireBeyond 3y ago
      By design. It was specifically noted in a lot of the internal presentations and such leading up to launch that one of the goals with Zelle was shifting the nexus of liability away from the banks.
  - slumos 3y ago
    because by law they are liable (over $50)
Suppafly 3y ago
The flip side is that zelle has always been equivalent to handing someone cash. You wouldn't expect to get your cash back after you handed it to a scammer in real life. But since zelle feels like a credit card transaction, people expect there to be safeguards built in, despite being told all along that once you send the money it's gone. It's like the people who used to abuse the friends/family policy on paypal to cut out paypals fees and then were surprised when they had no buyer/seller protection, when they had to click through several messages specifically telling them that.

sib 3y ago

"Only two million reported fraudulent transactions per year" :)

deleted 3y ago

[deleted]

swatcoder 3y ago

That's the same defense used for all recent failings of Big Tech at scale: "Well, when you sell as many apples as we do, of course you'll sell a few billion rotten ones. You can't expect us to check them all at this volume!"

jacquesm 3y ago
Not really. Fraud is a function of all payment systems because of human nature, not because of the tech. You could implement all of this with paper and sliderules and there would still be fraudulent transactions.
- LeifCarrotson 3y ago
  The difference is that in big tech, the fraud is expected because of the scale, it's an amoral faceless algorithm. If you had a human verifying each transaction, you could blame (or at least appeal to) the human.
  - jacquesm 3y ago
    That human would likely do much worse than the algorithms. This is a real problem and as far as I know there is no way to get this resolved because the main reason the algorithm is able to outperform the human is because it enables a larger volume and so you have more data to work with. This is the same reason why a PSP will always give you better fraud protection than rolling your own, they look at so much more data than you ever will that they will be able to better tell friend from foe. Fewer false positives and fewer false negatives. Still too much, but the theory is that in order to be able to detect fraud you will have to have some fraud!
    - thaumasiotes 3y ago
      > but the theory is that in order to be able to detect fraud you will have to have some fraud! That fails to argue that having any fraud is beneficial; if you have no fraud, there is no value in being able to detect fraud.
      - jacquesm 3y ago
        Yes, but for that there would have to be no fraud. You can't know your error rate without having some known errors. Otherwise you may well be simply blind to the fraud that you do have but are not aware of. That fraud by itself is not beneficial goes without saying.
        thaumasiotes 3y ago
        That is true, but it also tends to make the original statement meaningless. Now you're saying that (1) "in order to detect fraud, you have to have some fraud", and (2) "everyone everywhere, with no exceptions, has some fraud". This means there is no requirement for being able to detect fraud that is not automatically satisfied by everyone. Why bother talking about a requirement that is automatically satisfied?
        jacquesm 3y ago
        Because it is the degree of fraud that you catch that matters. Every financial system has fraud. In the old days - I used to work at a bank - the banks knew that there was fraud, but usually they didn't have a really good grip on how many of their transactions were fraudulent and how much of that they caught. The limitations on human resources alone made this a losing battle. Just like any classification system a fraud control system has false positives, false negatives, true positives and true negatives. In an ideal version of such a system you have no false positives and false negatives. But that idealized version of that system (the one that perfectly classifies fraudulent transactions and non-fraudulent transactions) is static. It can't adapt to cases of fraud that it hasn't seen yet. Eventually a fraudulent transaction gets through. And that transaction if not detected timely but after the fact (so now there is some detected fraud, in the interval prior to its detection it was undetected fraud) will result in an update to the fraud detection system (probably it will need more than one example to be able to generalize from). Now the perfect system may start to generate false positives or false negatives on other transactions. Run the 'perfect' system for long enough and it will be like every other fraud control system, a certain fraction of fraud will get through and a certain fraction of good transactions will be marked as fraud. How low you can do this sustainably is an open question but there is a lot of money to be made by squeezing out the last little bits and so a lot of money is poured into these systems. The nasty bit is that many of the players in this space attempt to off-load their residual risk on others (such as merchants or consumers) and that gives them less of an incentive to do the best job they can. So that's why all of this is relevant. I hope I'm able to explain it clearly enough.
  - dymk 3y ago
    The difference is that in big tech, you can measure it in the first place. Are you really suggesting that that human-to-human systems have always had less fraud? Of course not, the fraud just wasn't logged and reported.
  - cdogl 3y ago
    “Big tech” is very far from the only sector where transactions can’t all be verified in person. The financial sector is one obvious case.
    - deleted 3y ago
      [deleted]
- djbusby 3y ago
  Zelle wouldn't help fraud victims at all. Most other payment systems have some recourse.

IG_Semmelweiss 3y ago

A big portion of them happening now thanks to chatgpt. For example, my partner posted an item for sale in FB marketplace. The buyer said she couldnt pick up item, but her brother would. She could pay via Zelle, all she needed was an email & phone # . None of that seemed weird, so my partner agreed. The buyer then said she sent a Zelle payment. My partner got an email from "Zelle Pay" saying money was pending due to my partners account not being a business account. Luckily, we know zelle and didnt fall for it. The sender was a Gmail account. My partner must have been talking with a bot. 5 min later, another buyer showed up. She also could not pick up but her brother would. She was to pay via zelle. Be careful with FB marketplace. It's a mess now.

Nursie 3y ago
There's the exact same scam here in Australia, but using PayID instead of Zelle. I'm not sure there's a particular reason to think it's a bot or AI is there? It could just be a script and a call-centre type operation.
tetromino_ 3y ago
> None of that seemed weird In my experience, in a FB marketplace transaction where the buyer picks up the item, the buyer only pays after personally inspecting the item and (often) haggling a bit. Prepaying using Zelle for an unseen item is very weird.
- sixothree 3y ago
  Yeah. If you're picking up the item in person, you can bring cash.
gs17 3y ago
That scam predates ChatGPT by a lot, it's not necessarily AI driven.
- BoorishBears 3y ago
  It had nothing to do with ChatGPT, if anything ChatGPT would have let them come up with more unique messages

jacquesm 3y ago

Yes. VISA and MC are at many orders of magnitude above that in an absolute sense.

phone8675309 3y ago
Yes, and they have mechanisms for disputing fraudulent transactions with a method for restitution if the transaction is a scam.
- djbusby 3y ago
  And Zelle did nothing. Now they might start
  - FireBeyond 3y ago
    By design. It was specifically noted in a lot of the internal presentations and such leading up to launch that one of the goals with Zelle was shifting the nexus of liability away from the banks.
- slumos 3y ago
  because by law they are liable (over $50)

Suppafly 3y ago

The flip side is that zelle has always been equivalent to handing someone cash. You wouldn't expect to get your cash back after you handed it to a scammer in real life. But since zelle feels like a credit card transaction, people expect there to be safeguards built in, despite being told all along that once you send the money it's gone. It's like the people who used to abuse the friends/family policy on paypal to cut out paypals fees and then were surprised when they had no buyer/seller protection, when they had to click through several messages specifically telling them that.