A report from the office of Democratic Massachusetts Senator Elizabeth Warren alleged that incidents of fraud and scams are on the rise on payment service Zelle.
The report, released on Monday, cites data from four banks that documented 192,878 cases with a collective value of $213.8 million in 2021 and the first half of 2022 in which a customer claimed to have been fraudulently deceived. to make a payment. In only about 3,500 cases, these banks refunded the customer, according to the report.
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Additionally, in cases where clear funds were withdrawn from customers’ accounts without authorization, only 47% of those dollars were refunded.
Data for individual banks shows an increase in fraud and scams, according to the report. PNC Bank had 8,848 cases on Zelle in 2020 and is on track to have around 12,300 cases this year. US Bank had 14,886 cases in 2020 and 27,702 cases in 2021. Truist had 9,455 fraud and scam cases on Zelle in 2020, which jumped to 22,045 last year.
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Early Warning Services (EWS), the fintech company owned by seven major U.S. banks that operates Zelle, provided the following statement to FOX Business.
“Tens of millions of consumers use Zelle without incident, with more than 99.9% of payments completed without any reports of fraud or scams. Zelle usage has grown significantly since its launch, from 247 million transactions in 2017 to 1.8 billion in 2021, while the proportion of fraud and scams has steadily declined.”
“We need stronger consumer protections and holding these banks accountable,” Warren explained in a tweet Monday about the Zelle fraud.
Zelle, launched in 2017, has been used for more than five billion transactions worth nearly $1.5 trillion in five years, including $155 billion in payments in the second quarter of this year, according to a report. press release published in September by the payment service. Payment volume increased 27% year-over-year, according to the release.
Customers at over 1,700 banks and credit unions currently have the ability to use Zelle.
The report from Warren’s office comes after the Massachusetts senator raised the issue of payment service fraud during a September hearing held by the Senate Banking, Housing and Urban Affairs Committee.
During the hearing, she pressed executives at some of America’s largest banks about the number of customers who had reported incidents of fraud on Zelle. Warren has also tried to get bank CEOs to commit their banks to reimburse any cases where customers complain of being defrauded on Zelle.
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Banks are required under the Electronic Funds Transfer Act to reimburse customers when funds are illegally withdrawn from their accounts without authorization. The banks have argued that in the event of fraud – that is, a customer’s account is compromised in some way and they send an unauthorized payment – they refund the clients. Banks are more reluctant to reimburse customers who claim to have been scammed, arguing that customers would make such claims more often and that it would be difficult to tell if the customer was telling the truth.
The Associated Press contributed to this report.