A group of lawmakers recently forwarded correspondence to seven of the nation’s largest banks, seeking answers regarding alleged fraud on the online money transfer program Zelle.
U.S. Sens. Elizabeth Warren (D-MA), Bob Menendez (D-NJ), Jack Reed (D-RI), Sherrod Brown (D-OH), Chris Van Hollen (D-MD), Sheldon Whitehouse (D-RI), and Bernie Sanders (I-VT) sent the letters to Bank of America, Truist, Capital One, JPMorgan Chase, PNC, U.S. Bank, and Wells Fargo, which collectively own Zelle’s parent company.
Two years ago, nearly 18 million Americans were defrauded through scams involving Zelle and other instant payment applications, asserting the banks participating in the network appear not to have provided sufficient recourse to their customers.
“In 2021, consumers and businesses made 1.8 billion payments to transfer $490 billion through Zelle…[and p]ayment volumes have increased 49 percent year-over-year,” the senators wrote. “As these payment networks have become ubiquitous, frauds and scams have proliferated. 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.”
The senators indicated per Zelle’s parent company, Early Warning Services, LLC (EWS), consumers sent $490 billion through Zelle in 2021, of which an estimated $440 million were lost through fraud and scams.
It is unclear exactly how or who determined whether a transaction is fraudulent or a scam.
“The distinction EWS draws between fraud (transactions not authorized by the account owner) and scams (transactions authorized by the account owner but induced through deception) ignores how consumers actually suffer financial loss on Zelle,” the senators concluded.