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Banks Often Refuse To Pay When Customers Claim They Have Stolen Money From Zelle

Arliess Oriach was shot and robbed on her way home from shopping one afternoon in March. The thief asked for an iPhone and an access code. Urach gave them up and fled.

The next morning, Brooklyn-based Orach said he found thieves using multiple money transfer apps, including Zelle, to withdraw $8,294 from his Capital One bank account. He called Capital One hoping the bank would refund the money. stolen, as required by federal law. The bank only responded with $250, saying they found no evidence the rest of the money was stolen. Urach fainted.

“I reported it to the police, identified the suspect at the police station and testified before a grand jury,” he said. “But none of that seemed to help in my case.”

After asked Capital One about Urach’s case, bank officials said they believed it was a scam and would return the money. Capital One said in an emailed statement: “We apologize to our customers for the additional stress this issue has caused.”

In recent years, payment apps like Zelle, Venmo, and Cash App have become the preferred way for millions of customers to transfer money from one person to another. Last year, people sent $490 billion through Zelle, the most popular payment app in the United States, and $230 billion through its closest competitor, Venmo.

However, for the same reasons that attract customers to these apps—free, fast, and convenient—they’re easy targets for scammers and thieves. The bank insists that it should not refund a customer who inadvertently gave the scammer permission to use the account, but customers like Urach are often reluctant to refund. This could be a possible violation of the law.

Una ley federal de 1978 llamada Regla E requiere que un banco recargue a un cliente cuando se roba dinero de la cuenta de un consumidor a través de un pago electrónico iniciado por otra persona, como en el caso del Sr. Orach.

Debido a que Reg E se redactó mucho antes de que aparecieran las aplicaciones de pago, la Agencia de Protección Financiera del Consumidor emitió una guía el año pasado de que la ley se aplicaría a todos los pagos en línea individuales. El banco ha dejado claro que es responsable de todas las transferencias de dinero en línea no autorizadas (cualquier pago iniciado por alguien que no sea el cliente y realizado sin la autorización del cliente).

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As Raúl Cisneros said: “When a consumer notifies a financial institution that funds have been stolen from the consumer’s account, the financial institution has the responsibility to demonstrate that the transfer of funds from the consumer’s account has been approved”

Yet despite the updated guidelines, in many cases banks are refusing to refund customers who claim money was stolen from their accounts, often with supporting documents. Banks rarely provide clear explanations for their decisions, leaving little or no room for maneuver for victimized customers.

Payments consultant Peter Tabling said the Consumer Agency’s updated guidance was “creating a lot of anxiety and confusion for banks”. “Rule E is not intended for treasury products.”

Chuck Rove revealed in early February that the thief had transferred his mobile phone number to another device using an attack technique called “SIM swapping”. The thief then used Rove’s number to access a Bank of America account and withdraw $3,450 through Zelle. Rove reported the theft as soon as it was discovered, but his claim was denied. The bank said the transaction appeared to be unapproved.

Ruoff sent additional documents to the bank, including a police report and a letter from Verizon describing the incident, and asked that the matter be reconsidered. They told him that he had to wait 45 days for a response. Once the deadline passed, they told him to keep waiting. Rove spent hours calling every few days to update his claims.

As a Bank of America customer of 34 years, Mr. “I’ve never used Zelle,” Rove reiterated. “I told the old lady I spoke to earlier, Do you think I’m going to go to the police station and file a false report? This is a crime. ”

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After The Times contacted Bank of America, Mr. Rove’s money was refunded. Bank spokesman Bill Haldane said the bank is already reconsidering its decision and paying the bill after reviewing additional information provided by Rove.

Headquartered in Scottsdale, Arizona, Early Warning Services owns the most popular payment app, Zelle, and is owned by seven banks, including Bank of America, Capital One, JPMorgan Chase, PNC, Trust, US Bank and Wells Fargo. . However, the 1,600 banks and credit unions that offer Zelle to their customers each use their own security settings and policies.

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Neither the bank nor Early Warning publicly release data on fraud, so it’s unclear how prevalent fraud and theft are at Zelle. Early Warning spokeswoman Megan Fentland said that Orach and Mr. incidents like the one described by Rove were “rare” and represented a small fraction of the platform’s activity, she stated.

According to a report by Aite-Nuvarica Group consultant Shirley Inscoe, in a survey of nearly 1,400 people who accessed their accounts without their consent last year, a quarter said Zelle or other personal payment services had been used to make unauthorized money transfers. . Financial services consulting. It was only surpassed by fraudulent credit card transactions.

Bob Sullivan, a journalist and longtime consumer advocate, compares scams, thefts, and banks’ reluctance to absorb losses to early online banking, where phishing and other tricks try to get the money. Much like the outbreak, banks have consistently turned down customer requests. In 2005, the Federal Reserve made it clear that it expected banks to handle such cases.

Explicit theft is just one aspect of the much larger fraud problem with Zelle and other payment apps. In March, The Times reported that fraudsters and other scammers often trick people into paying themselves, for example by posing as bank employees or selling fraudulent products. In these cases, the bank will generally refuse to refund, arguing that the transfer is not “unauthorized” within the meaning of the law because the customer initiated the transfer himself.

Some legislators are starting to register this.

Consumer Affairs Commissioner Rohit Chopra asked the House Financial Services Committee about the rise in online fraud after the Times report, saying it was on the bureau’s radar. “Corruption is building up and it’s a big problem,” Chopra said.

Congressman Stephen F. Lynch, a Democrat from Massachusetts, raised consumer protection concerns about Zell’s transfer during the hearing. “In principle, the bank is responsible,” Lynch said.

Massachusetts Democratic Senator Elizabeth Warren recently criticized big banks for owning gelatin. Warren, a member of the Senate Banking Committee, said: “Reports of widespread consumer fraud at Zelle are very concerning, especially since the parent company and the major banks that own it are not responsible.”

In April, she, along with another Democrat, Sen. Bob Menendez, wrote a harsh letter to Early Warning Services.

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Customers have filed separate lawsuits for class action status against Bank of America, Capital One and Wells Fargo, alleging that lenders have not done enough to protect consumers from Zelle fraud. Wells Fargo and Capital One declined to comment. Bank of America said it disagreed with those allegations.

Changing regulatory guidelines could change the fate of robbery victims. In May 2020, Martin Bronson, 80, a retiree from Florham Park, New Jersey, received a call from a man claiming to be an Amazon customer service agent. Bronson used the TeamView remote control app to give the man access to his computer. The caller then went to his Bank of America account and transferred $3,316 using Zelle.

Mr. Bronson submitted a police report to the bank. His request was denied.

After the Consumers’ Agency published the directives according to the Reg E couvrirait tous les envois de fonds personals no autorisés – and after the Times contacted Bank of America au sujet du cas de Bronson le mois dernier – nous avons eu of good news. The bank returned the money.

Bank of America spokesman Haldane said: “As with all customer orders, we have determined the claim based on current facts and Rule E guidelines.”

Last January, Carla Lisieux, a therapist in White Plains, New York, discovered that $4,750 was missing from her Chase checking account. She notified the bank and said that she discovered that the money had been transferred through Zelle to a Gmail account that she did not know about. Lisieux insists that she did not move.

The bank repeatedly denied his payment request, saying it had found no evidence of fraud. The bank sent him a letter in March saying, “The device you used matches his records, no new devices were added, and there were no invalid login attempts.”

Lisieux said she was surprised that 25 years of experience as a Chase client didn’t seem to add up. She said: “You are calling me a liar and a criminal. Because what you are saying is that I am trying to steal $4,750 from the bank.” “I really mean I can’t explain what happened. All I can say is that I didn’t do this. All you can tell me is that you don’t believe me.”

Article Source : https://www.nytimes.com/2022/06/20/business/zelle-money-stolen-banks.html

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