JPMorgan Chase, Bank of America and Wells Fargo are failing to protect customers from hundreds of millions of dollars in scams and fraud each year, according to a U.S. Senate panel.
At a hearing held by the Permanent Subcommittee on Investigations, Democratic Senator and Chairman Richard Blumenthal said the banking giants’ customers had filed claims to recover $456 million in 2022 – all due to fraud and scams on the Zelle payment network.
‘America’s banks have a dirty little secret. It’s called Zelle…
Zelle markets itself as “A fast and easy way to send and receive money.” But as this committee has discovered, a quick and easy way to lose money is often what happens on Zelle.”
Senator Blumenthal says Zelle – a network owned by seven US banks, including Chase, BofA and Wells Fargo – creates a veil of security and leaves customers far too vulnerable to fraud.
“Zelle wire transfers are virtually instantaneous and irreversible, and by the time a consumer knows he’s been scammed, it’s usually too late to do anything about it — at least according to Zelle and according to the banks that own, monitor and in fact Control Zelle…
Zelle and the banks that own it offer customers the appearance of the trust they believe they deserve. But the risks there are real and present, and they are simply failing to protect consumers in the way they deserve.”
The Permanent Subcommittee on Investigations found that of the $456 million in customers lost to Zelle scams in 2022, $341 million was refunded. According to the panel, 13% of users on Zelle and other peer-to-peer payment platforms report sending money to someone and later realizing it was a scam.
In response to the Senate panel’s investigation, Zelle released a statement through its parent company, Early Warning Services, LLC.
“Providing safe and reliable service to consumers is the top priority of Early Warning Services, LLC, Zelle’s network operator, and our 2,100 participating banks and credit unions.
As a result of our continued efforts to build on Zelle’s strong foundation of security, less than one-tenth of one percent (0.1%) of transactions are reported as fraud or scam, making Zelle one of the most secure ways for consumers to pay people they know and trust. Zelle is also currently generally free for most consumers.”
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