Warren Calls Out Wells Fargo and Zelle for “Evasive” Responses about Fraud(warren.senate.gov)
warren.senate.gov
Warren Calls Out Wells Fargo and Zelle for “Evasive” Responses about Fraud
https://www.warren.senate.gov/oversight/letters/warren-calls-out-wells-fargo-and-zelle-for-evasive-inaccurate-and-misleading-responses-about-fraud-and-scams-on-zelle-calls-for-companies-to-publicly-release-all-data-on-zelle-fraud-and-scams
120 comments
It doesn't have to be something egregious like the Nigerian Prince. It could be a Craigslist concert tickets deal where you pay in advance and never hear from the "seller" again. Why be callous to innocent victims? Unlike cash, Zelle is a digital system that could provide some protections for all parties involved, like the option to file a dispute.
Zelle has low limits for this very reason. There are reversible payment methods available if you are transacting in a low trust situation. Warren and all these activist types are going to make selling on Craigslist effectively be cash only again, and all payment systems will just be Paypal with varying degrees of bad support.
Zelle limits vary per bank. I've recieved an over 2 thousand dollar payment through Zelle.
> all payment systems will just be Paypal
I wonder if Warren is trying to intentionally accomplish that?
I wonder if Warren is trying to intentionally accomplish that?
So all the digital payment methods must be a clone of paypal with "protections" for your own money? If paypal would be so great people would use only that trash.
So every time I sell something on craigslist I need to worry about being drawn into some kafkaesque bureaucratic nightmare because someone might claim I didn't fulfill my end of the bargain? Got it, I'll just throw out my old stuff going forward.
Why doesn't the government just do their job and catch and prosecute criminals?
Why doesn't the government just do their job and catch and prosecute criminals?
Catching and prosecuting criminals does approximately nothing to actually reduce crime.
If you want to reduce crime, ask the government to do one of its other jobs: Provide a stable foundation for every member of the country, so that they don't have to fear being left destitute if they can't get someone richer to agree to support them (in exchange for labor).
This will make an immediate difference to many (those who are committing crimes purely because they can't otherwise survive), and will, within a few generations, eliminate many other categories of criminals—those whom the current system has failed, and whose criminality has to do with finding a different kind of dignity, or sticking it to the man, or just joining the criminal economy as an alternative to the one that dropped them through its gaping cracks.
If you want to reduce crime, ask the government to do one of its other jobs: Provide a stable foundation for every member of the country, so that they don't have to fear being left destitute if they can't get someone richer to agree to support them (in exchange for labor).
This will make an immediate difference to many (those who are committing crimes purely because they can't otherwise survive), and will, within a few generations, eliminate many other categories of criminals—those whom the current system has failed, and whose criminality has to do with finding a different kind of dignity, or sticking it to the man, or just joining the criminal economy as an alternative to the one that dropped them through its gaping cracks.
This is a bit of an idealist view of criminality. Plenty of criminals are criminals because "real work is for suckers". Look at the theft rings in San Francisco (catalytic converters, shoplifting), it's not some poor destitute victim, but rather a part of a criminal organization that rakes in millions of dollars.
They could certainly get a regular job like most of America, but they'd rather make easy money.
More social services ain't gonna fix that.
They could certainly get a regular job like most of America, but they'd rather make easy money.
More social services ain't gonna fix that.
I'm not talking about "more social services"; I'm talking about UBI, which would absolutely remove most of the incentive to participate in such things.
I realize I forgot to actually put that in the GP, though. Sorry about the lack of clarity.
I realize I forgot to actually put that in the GP, though. Sorry about the lack of clarity.
What happens if 100% of people decide they don't want to be the chump paying for UBI and we all go on UBI? With no one left making money, there's no way for the country to make pay UBI payments.
Using UBI as an argument to eliminate theft crime is like paying terrorists, it doesn't work in the long run; you only end up funding a future, more effective terrorist or criminal who will demand more and more.
Using UBI as an argument to eliminate theft crime is like paying terrorists, it doesn't work in the long run; you only end up funding a future, more effective terrorist or criminal who will demand more and more.
I assume it would be much like it currently is where we have a lower class subsisting on a low barely livable wage because that’s how they prefer to exist while the rest of us work and the payment for our extra work to them is that we don’t have to deal with them in day to day society. This sounds a lot like SSI for some of the people on it. Unfortunately I don’t think people actually work like that and instead you get shiftless youth.
> we have a lower class subsisting on a low barely livable wage >> because that's how they prefer to exist << while the rest of us work...
Citation required.
Show evidence a population exists, anything close to as large as you're intimating ("lower class" as you called it), that actually wants a "low barely livable wage"?
Citation required.
Show evidence a population exists, anything close to as large as you're intimating ("lower class" as you called it), that actually wants a "low barely livable wage"?
>Catching and prosecuting criminals does approximately nothing to actually reduce crime.
I know it's wrong to be biased towards mainstream thinking, but it is fair to ask for sources for statements like that.
I know it's wrong to be biased towards mainstream thinking, but it is fair to ask for sources for statements like that.
>I know it's wrong to be biased towards mainstream thinking,
Why would this be wrong?
Why would this be wrong?
the US has the highest rate of incarceration and still has a high rate of violent crime compared to other wealthy countries
You are assuming that all that matters is wealth, which isn't the case. Bangladesh has lower homicide and robbery rates than the U.S. Even Vietnam has much lower homicide and robbery rates.
The US incarcerates a lot because we have a lot more crime compared to other wealthy countries. The US has the same homicide rate as Argentina, about 5 per 100,000. That's a decent proxy for the overall size of our criminal class. In many cases, Argentina is a good proxy for the U.S. -- a formerly wealthy nation that has declined, suffers from corruption, and has quite comparable demographics and income distribution to the U.S. (although a lower level of absolute income).
The US incarcerates 3.5x more people than Argentina, which drives the robbery rate to be about 1/10 that of Argentina. We can see what happens when some localities like SF or CA decide not to prosecute non-violent crime -- you get an explosion of robberies. So poorer nations like Argentina that also have a large criminal class end up just forced to tolerate higher levels of robbery.
Whereas nations that don't have such a large criminal class - be they wealthy like Japan, middle income like Vietnam or poor like Bangladesh -- simply don't need to make a decision to warehouse so many people or face an explosion of crime.
Unfortunately the US does need to deal with this and make some tough choices. Either we go the Argentina route and only incarcerate the most violent offenders -- basically taking the SF approach nationwide -- or we pay for a carceral state to warehouse our criminals. When you go the Argentina route, you get a lot of walled compounds, armed guards, as the wealthy have to spend money on personal security while the middle class and poor are just robbed a lot more.
But pretending that we arrest people for no reason at all, and that this does not result in lower crime rates -- I think this is an inaccurate description of the trade offs. There are real trade offs here.
The US incarcerates a lot because we have a lot more crime compared to other wealthy countries. The US has the same homicide rate as Argentina, about 5 per 100,000. That's a decent proxy for the overall size of our criminal class. In many cases, Argentina is a good proxy for the U.S. -- a formerly wealthy nation that has declined, suffers from corruption, and has quite comparable demographics and income distribution to the U.S. (although a lower level of absolute income).
The US incarcerates 3.5x more people than Argentina, which drives the robbery rate to be about 1/10 that of Argentina. We can see what happens when some localities like SF or CA decide not to prosecute non-violent crime -- you get an explosion of robberies. So poorer nations like Argentina that also have a large criminal class end up just forced to tolerate higher levels of robbery.
Whereas nations that don't have such a large criminal class - be they wealthy like Japan, middle income like Vietnam or poor like Bangladesh -- simply don't need to make a decision to warehouse so many people or face an explosion of crime.
Unfortunately the US does need to deal with this and make some tough choices. Either we go the Argentina route and only incarcerate the most violent offenders -- basically taking the SF approach nationwide -- or we pay for a carceral state to warehouse our criminals. When you go the Argentina route, you get a lot of walled compounds, armed guards, as the wealthy have to spend money on personal security while the middle class and poor are just robbed a lot more.
But pretending that we arrest people for no reason at all, and that this does not result in lower crime rates -- I think this is an inaccurate description of the trade offs. There are real trade offs here.
Besides homicides, I take all crime rates with a heaping grain of salt, although it's probably fair to consider them to generally be a significant undercount.
It does not seem entirely intuitive to me that mass incarceration would drive down crime rates in the long run. Prisons are themselves maladaptive institutions that are harmful to most inmates and indeed are certainly hardening people who could otherwise have been steered in a more productive direction. There is also the fact that taking people out of their families and communities has terrible downstream effects that get passed on to the next generation, causing the cycle to continue.
Also, you say we don't arrest people for no reason, but there are a lot of people in prison who did not commit the crimes they were convicted of. Probably not a majority but I'll bet it's a non negligible minority. How would you feel about a society that locked you up in brutal conditions for something you didn't even do? What about people locked up for drug possession with the same people locked up for violent crimes? Does that make any sense?
Personally I think we are at an inflection point. What we have been doing in the US is not working. The illusion that we can maintain increasing levels of inequality by just locking up more and more people is fading fast. This problem can't be solved long term with more incarceration. I am not convinced that the people you've characterized as the "criminal class" are inherently so. It's also dehumanizing to describe them in this way. Many, if not most, are reacting to difficult situations bordering on the impossible. That's not to be pollyanna and pretend that there aren't some very dangerous people locked up. This is a very difficult problem.
We obviously aren't going to just empty our prisons tomorrow. But we should all be thinking about what kind of society we want to live in and how we might make progress towards that vision. In many ways, even wealthy America is already beginning to feel like a luxury penal colony. The existence of the brutal penal colonies distracts us from that fact.
I want safer cities and communities than what we presently have, but I don't believe that our current incarceration system is effectively getting us there, even if it looks somewhat effective compared to Argentina. Even then though, I ask at what cost? Do "criminals" not matter at all? I think they do, even if they have committed crimes.
If you actually believe that there is a large class of people who are inherently worse than others, you should really think through what the implications might be.
It does not seem entirely intuitive to me that mass incarceration would drive down crime rates in the long run. Prisons are themselves maladaptive institutions that are harmful to most inmates and indeed are certainly hardening people who could otherwise have been steered in a more productive direction. There is also the fact that taking people out of their families and communities has terrible downstream effects that get passed on to the next generation, causing the cycle to continue.
Also, you say we don't arrest people for no reason, but there are a lot of people in prison who did not commit the crimes they were convicted of. Probably not a majority but I'll bet it's a non negligible minority. How would you feel about a society that locked you up in brutal conditions for something you didn't even do? What about people locked up for drug possession with the same people locked up for violent crimes? Does that make any sense?
Personally I think we are at an inflection point. What we have been doing in the US is not working. The illusion that we can maintain increasing levels of inequality by just locking up more and more people is fading fast. This problem can't be solved long term with more incarceration. I am not convinced that the people you've characterized as the "criminal class" are inherently so. It's also dehumanizing to describe them in this way. Many, if not most, are reacting to difficult situations bordering on the impossible. That's not to be pollyanna and pretend that there aren't some very dangerous people locked up. This is a very difficult problem.
We obviously aren't going to just empty our prisons tomorrow. But we should all be thinking about what kind of society we want to live in and how we might make progress towards that vision. In many ways, even wealthy America is already beginning to feel like a luxury penal colony. The existence of the brutal penal colonies distracts us from that fact.
I want safer cities and communities than what we presently have, but I don't believe that our current incarceration system is effectively getting us there, even if it looks somewhat effective compared to Argentina. Even then though, I ask at what cost? Do "criminals" not matter at all? I think they do, even if they have committed crimes.
If you actually believe that there is a large class of people who are inherently worse than others, you should really think through what the implications might be.
The clearance rates on violent crimes in most major cities in the US is abysmally low, as low as 1 in 10 in some places. So yeah a 10% chance of getting caught is a poor deterrent.
I think the chance of getting caught factors into people's mental assessments of whether or not to commit crimes. If every criminal had a 100% chance of being caught and convicted, that would probably lower the crime rate. But if people think it's 99%, then they'll believe that they're the 1%, and it probably wouldn't change much. The US certainly doesn't provide the illusion of 100% of crimes solved, so that feeds into people's mental calculus. (Plus, I'm sure people think they could beat the charges even if they were caught. As long as there are juries and not Fact-o-Bot Model 9000 All-Knowing Oracles deciding the facts of the case, some of them are right!)
I think you could potentially observe a microcosm of this effect when comparing speed cameras to police officers with radar guns. People hate the speed camera tickets and fight vehemently to have the cameras removed. I've seen a lot of pictures of smashed speed cameras as well. Much less hate is directed at actual police cars pulling people over; maybe I'm reading the wrong forums, but I've literally never heard anyone say "we shouldn't have speeding tickets anymore". The chance of talking a human out of the consequences of your actions makes people feel comfy; a robot that issues you a fine whenever you speed is really scary, though, because you know you speed from time to time with a good reason.
(Sure, there can be other effects. You don't want a database of your location to exist. You had a good reason for speeding; there was a tornado chasing you and your partner went into labor and you were driving to the nearest hospital. And, the police officers will shoot you if you smash their car as a speeding enforcement protest. So maybe these confounding factors make my comparison irrelevant. I think it's interesting to think about, nonetheless.)
I think you could potentially observe a microcosm of this effect when comparing speed cameras to police officers with radar guns. People hate the speed camera tickets and fight vehemently to have the cameras removed. I've seen a lot of pictures of smashed speed cameras as well. Much less hate is directed at actual police cars pulling people over; maybe I'm reading the wrong forums, but I've literally never heard anyone say "we shouldn't have speeding tickets anymore". The chance of talking a human out of the consequences of your actions makes people feel comfy; a robot that issues you a fine whenever you speed is really scary, though, because you know you speed from time to time with a good reason.
(Sure, there can be other effects. You don't want a database of your location to exist. You had a good reason for speeding; there was a tornado chasing you and your partner went into labor and you were driving to the nearest hospital. And, the police officers will shoot you if you smash their car as a speeding enforcement protest. So maybe these confounding factors make my comparison irrelevant. I think it's interesting to think about, nonetheless.)
Doesn't prove anything? Perhaps the US has a disproportionate number of criminals.
why would the us have more criminals than every other country on the planet
We’ll we certainly have more homicide than any OECD nation. It’s probably relevant that the US is a multi-ethnic, multi-racial, and religiously pluralistic democracy born in violent revolution. That’s really unusual for a highly economically developed nation. In fact the US is super different from other OECD nations on almost all fronts.
Certainly nothing to do with the ridiculous gun laws. No sir. It’s multiculturalism.
This isn’t a good faith reading of what I’m saying at all.
You could make really a really compelling argument that the US is better thought of as a more economically advanced Brazil rather than a more violent Germany. It seems clear to me that we have a constitutional amendment providing for a right to bare arms precisely because we emerged as a fractious collection of former colonies after armed struggle against England.
You could make really a really compelling argument that the US is better thought of as a more economically advanced Brazil rather than a more violent Germany. It seems clear to me that we have a constitutional amendment providing for a right to bare arms precisely because we emerged as a fractious collection of former colonies after armed struggle against England.
It doesn't matter why. Unless you can show that the US has the same or less criminals you can't show that high incarceration does not lower crime.
but "criminal" depends almost entirely on how a country defines and polices crime, does it not? so all you can do is look at numbers like incarceration rate, no?
I don't believe it is possible to actually accurately determine this. Even if you could define crimes the same across countries, many crimes go unsolved so you wouldn't know if it is one criminal or multiple criminals committing crimes. That was my point. The claim was that incarnation of criminals does not lower crime. I am saying we don't know if that is the case.
> If you want to reduce crime, ask the government to do one of its other jobs: Provide a stable foundation for every member of the country, so that they don't have to fear being left destitute if they can't get someone richer to agree to support them (in exchange for labor).
This is may be true in the case of things like street level drug sales but most of these scams are perpetuated by people in other countries using bank accounts ("drops") set up with stolen American identities. America can't really influence social policy in Nigeria or India or Russia on the scale you are talking about. The scammers only need one success every couple months to make the average salary in their country and the smarter ones are making hundreds of thousands of dollars.
This is may be true in the case of things like street level drug sales but most of these scams are perpetuated by people in other countries using bank accounts ("drops") set up with stolen American identities. America can't really influence social policy in Nigeria or India or Russia on the scale you are talking about. The scammers only need one success every couple months to make the average salary in their country and the smarter ones are making hundreds of thousands of dollars.
Probably making white-collar, and elected, police and prosecutor corrruption illegal, and prosecuting that, would engender greater respect for the law.
This makes no sense. Some people commit multiple crimes. If everybody who committed crimes were in jail then only new criminals would commit crimes.
Don't get me wrong, doing certain other things may also help reduce crime, but it is not the only way to reduce crime.
Don't get me wrong, doing certain other things may also help reduce crime, but it is not the only way to reduce crime.
If everybody that committed crimes was in jail, there would also be less "street justice" which would further reduce crime.
>Provide a stable foundation for every member of the country, so that they don't have to fear being left destitute if they can't get someone richer to agree to support them (in exchange for labor).
Your argument is that people on craiglist won't be scamming if they had a job? I'm sure that's true in the sense that there exists some people that fit the category, but how much % of criminals does that account for? I searched up some figures[1] and your theory doesn't appear to hold water. US has around the same property crime rate as columbia and vietnam, but I doubt anyone thinks that those two countries do a better job at providing "a stable foundation for every member of the country".
[1] https://www.nationmaster.com/country-info/stats/Crime/Percei...
Your argument is that people on craiglist won't be scamming if they had a job? I'm sure that's true in the sense that there exists some people that fit the category, but how much % of criminals does that account for? I searched up some figures[1] and your theory doesn't appear to hold water. US has around the same property crime rate as columbia and vietnam, but I doubt anyone thinks that those two countries do a better job at providing "a stable foundation for every member of the country".
[1] https://www.nationmaster.com/country-info/stats/Crime/Percei...
Actually, having worked in hospitality, the threat of a device becoming useless if stolen does hinder theft. (Won’t stop very sophisticated criminals who can make money off parts, but there’s always a threshold with this sort of thing.) If a criminal knows a financial channel can be reverted they will avoid it. That provides the other side of the transaction a clue. If Zelle had a credible threat of reversing fraud people could insist on using it - and thus it becomes a proxy for trust in an otherwise trust-less situation.
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Having charges be very difficult to reverse is a protection to the user. Treat it like cash which you don’t need to carry a wallet around for.
Why treat it like cash when it's not cash, but a digital service pushed by banks? There will always be scum that abuse a system, but the way it is now the odds are stacked against honest people.
Because using Zelle to transfer money to someone who is not in your immediate physical vicinity is safer than putting an envelope full of cash in the mail?
Yeah, just like cash. Are you saying cash has no place in society? Certainly not I'd imagine - it has plenty of upsides. You just have to understand the risk model and what you can and cannot do with it.
There is no free lunch.
Plenty of people complain about the delay in sending cash digitally. Or Paypal siding with a buyer and the seller having their cash pulled back automatically because the buyer lied and said they never got it. Or money being tied up for months as resolutions to disagreements are verified.
Either you accept a bunch of controls to reduce fraud (and all the complexity and delay that goes along with it) or you get instant, irreversible payment transfers.
Your choice.
Plenty of people complain about the delay in sending cash digitally. Or Paypal siding with a buyer and the seller having their cash pulled back automatically because the buyer lied and said they never got it. Or money being tied up for months as resolutions to disagreements are verified.
Either you accept a bunch of controls to reduce fraud (and all the complexity and delay that goes along with it) or you get instant, irreversible payment transfers.
Your choice.
If charges were easy to reverse, we would see the opposite type of scam: people buying things and then making false claims of fraud to get the charges reversed.
This happens all the time with credit card chargebacks already. It would happen with Zelle too, if it was easy enough.
This happens all the time with credit card chargebacks already. It would happen with Zelle too, if it was easy enough.
Indeed and just be smart only use Zelle to pay people you know personally (and or are standing right in front of you) and before sending do a test of $1.
Warren here is fighting for people aren't that smart when it comes to using tech to send money.
Warren here is fighting for people aren't that smart when it comes to using tech to send money.
The victim absolutely has the right to file a dispute. In a court of law, which exist for exactly that reason!
Zelle is an alternative to ACH, and I’m glad it exists! However there are a lot of consumer protections in the ACH system, not so much with Zelle.
Like what? Zelle has exactly the same consumer protections as ACH, as far as I know. It's exactly the same consumer protection law in each case.
I know it's very easy to reverse an ACH transaction. The receiving bank (not the receiving account) is on the hook for 60 days (maybe more).
This is specifically what I'm talking about. ACH gives a ridiculously long window to contest and reverse the transaction. Zelle is more like a wire, for better or for worse: when that money is transferred it's a done deal and not reversible.
Right, but typically ACH is only reversed in cases of fraud, not because of some consumer issue (the product wasn't what I expected). And it's not an easy process to complete, it can take months to have access to your funds again.
An ACH transfer can also be reversed if the amount transferred was incorrect, if it's a duplicate transaction, or if it was sent to the wrong account number. Also, there's not a lot of pushback from the bank if a customer asserts ACH fraud when asking for a reversal. Good thing, because it's pretty trivial to get someone's routing and account number, they're printed on every check you write.
Zelle, on the other hand, will not reverse a payment if you get the phone number wrong.
Zelle, on the other hand, will not reverse a payment if you get the phone number wrong.
You’ve got a ton of this wrong - it is extremely hard to reverse an ach, doubly so if the receiving side of the reversal disagrees. They recently increased penalties to 500,000 per occurrence for improper reversals, and banned all reversals for non white listed reasons
That’s my understanding.
At the end of the day the banks need to balance their books. So if an ACH needs to be corrected, they figure out what went wrong and hash it out with the other bank.
I’ve had unexpected deposits show up in my account and then be removed days later. Likely someone fat fingered an account number.
But the system works because all the banks have an incentive to make it work and a requirement their books individually balance.
But you’re right. Unless it’s a bank’s mistake or obvious fraud where the bank played a roll, they generally aren’t interested in reversing ACH transfers over consumer issues.
At the end of the day the banks need to balance their books. So if an ACH needs to be corrected, they figure out what went wrong and hash it out with the other bank.
I’ve had unexpected deposits show up in my account and then be removed days later. Likely someone fat fingered an account number.
But the system works because all the banks have an incentive to make it work and a requirement their books individually balance.
But you’re right. Unless it’s a bank’s mistake or obvious fraud where the bank played a roll, they generally aren’t interested in reversing ACH transfers over consumer issues.
The reason is incentives and lack of protections. If banks don't eat the cost of fraud they don't properly protect people from being preyed upon.
Wire fraud is a huge problem already.
So people expect credit card/debit card level protection without paying the credit card/debit card fees or going through the process of merchant vetting by a payment processor?
In other words, banks shouldn’t be allowed to drop those protections to provide a cheaper service. And the fees are mostly just profit. Banks are responsible for knowing their customers.
>In other words, banks shouldn’t be allowed to drop those protections to provide a cheaper service.
Some much for freedom of choice. We the state, decided that you can't be trusted with making decisions about who to transact with, so we mandate that you use a transfer service with arbitration/escrow so you won't be financially harmed. It doesn't matter if you're sending money to a landlord that you lived at for a few years, or splitting a restaurant bill with friends. You must use a transfer service with this service provided, and pay the 1% fee used to fund such a scheme (note this is actually less than credit card interchange, which is around 2-3%).
Some much for freedom of choice. We the state, decided that you can't be trusted with making decisions about who to transact with, so we mandate that you use a transfer service with arbitration/escrow so you won't be financially harmed. It doesn't matter if you're sending money to a landlord that you lived at for a few years, or splitting a restaurant bill with friends. You must use a transfer service with this service provided, and pay the 1% fee used to fund such a scheme (note this is actually less than credit card interchange, which is around 2-3%).
> Some much for freedom of choice. We the state, decided that you can't be trusted with making decisions about who to transact with, so we mandate that you use a transfer service with arbitration/escrow so you won't be financially harmed.
You say this like these regulations magically just appeared fully formed from the head of Zeus ...
These regulations exists precisely because the fraud was rampant enough that it became a sufficient threat that people would quit using the financial system altogether.
You say this like these regulations magically just appeared fully formed from the head of Zeus ...
These regulations exists precisely because the fraud was rampant enough that it became a sufficient threat that people would quit using the financial system altogether.
People already have the option to not use zelle. If you want payment protection, use a service with it. Sometimes I just want to easily send money to friends/family without transaction fees.
>Banks are responsible for knowing their customers.
What do you think that means?
What do you think that means?
With other payment methods there are many methods to reverse transactions in response to fraud, which includes a person willingly sending money after being deceived. There’s no reason that an electronic payment method can’t provide that kind of protection, financial institutions have the responsibility to know who their customers are and to not facilitate fraud. They should be on the hook to be able to reverse a transaction.
A person should not be able to create an account, commit fraud, and run away with the proceeds. A bank is responsible for flagging suspicious transactions especially for new accounts… making them hold the bag when there is fraud means they will be motivated to accurately judge risk and refuse transactions when it is high.
A person should not be able to create an account, commit fraud, and run away with the proceeds. A bank is responsible for flagging suspicious transactions especially for new accounts… making them hold the bag when there is fraud means they will be motivated to accurately judge risk and refuse transactions when it is high.
But banks never claimed their payment services were for buyers and seller, only cash transfers.
If you want consumer protection, either pay by credit card or use another service.
When I make a Zelle transfer I get a big warning (and a box I have to check) which says "You can't reverse this transfer once complete".
It's like complaining Amazon doesn't sell airline tickets. Of course not, they never intended to sell airline tickets.
If you want consumer protection, either pay by credit card or use another service.
When I make a Zelle transfer I get a big warning (and a box I have to check) which says "You can't reverse this transfer once complete".
It's like complaining Amazon doesn't sell airline tickets. Of course not, they never intended to sell airline tickets.
60% of fraud is “friendly fraud” where you send your money to your associate (or make online card payment), call bank, accuse fraud and double your money.
Alternative demand money back from a completely fine product and delivery.
With too much consumer protection friendly fraud goes up easily. People will scam the system other way around.
Alternative demand money back from a completely fine product and delivery.
With too much consumer protection friendly fraud goes up easily. People will scam the system other way around.
Consider the payment system call cash: there is no way to reverse fraudulent transactions except via the court or criminal justice system. I think it is very reasonable to have an electronic cash payment system which you would use for the same purposes you currently use cash--mostly either in person transactions or with people you trust.
>"A person should not be able to create an account, commit fraud, and run away with the proceeds."
Well this is what we have a criminal justice system for.
>"A person should not be able to create an account, commit fraud, and run away with the proceeds."
Well this is what we have a criminal justice system for.
> making them hold the bag when there is fraud means they will be motivated to accurately judge risk and refuse transactions when it is high.
Except I would like to be able to use my own money, please
Except I would like to be able to use my own money, please
Agreed. We need to draw a line between complex or technological fraud and "people giving away their money of their own free will then complaining".
Real world scenario I witnessed recently:
1. subject had a bank account with the ability to link to Zelle
2. subject turned on Zelle to receive money from a family member
3. several high dollar Zelle transactions were made - subject claims that they were at home with covid and no one had access to her phone
4. she calls bank to cancel transactions, bank refunds money
5. bank investigates and claims face id and her IP address was used and takes refunds back
6. subject takes bank and zelle to court
7. Zelle says: we are just a middleman - not our responsibility
8. bank claims that it can't investigate where the money went because it was instant transferred
9. banks settles for some of the money
Conclusion? If you have to use Zelle or Venmo, attach it to a bank account with limited funds in it.
1. subject had a bank account with the ability to link to Zelle
2. subject turned on Zelle to receive money from a family member
3. several high dollar Zelle transactions were made - subject claims that they were at home with covid and no one had access to her phone
4. she calls bank to cancel transactions, bank refunds money
5. bank investigates and claims face id and her IP address was used and takes refunds back
6. subject takes bank and zelle to court
7. Zelle says: we are just a middleman - not our responsibility
8. bank claims that it can't investigate where the money went because it was instant transferred
9. banks settles for some of the money
Conclusion? If you have to use Zelle or Venmo, attach it to a bank account with limited funds in it.
Your story sounds possible with one exception, 8 "subject threatens to take bank and zelle to court". There is no universe where bank tells the judge it wont investigate.
>8. bank claims that it can't investigate where the money went because it was instant transferred
They really couldn't, or their policies didn't allow handing out information without a subpoena? Given KYC laws, I'm sure that every financial institution involved probably has the records somewhere. As for the policy itself, I'm not so sure whether zelle refusing to hand over recipient information is a bad thing. If I'm selling something on facebook marketplace, I wouldn't want my counterparty to get my dox just because they cried foul. I'd want a judge to examine the request before zelle hands over my info.
They really couldn't, or their policies didn't allow handing out information without a subpoena? Given KYC laws, I'm sure that every financial institution involved probably has the records somewhere. As for the policy itself, I'm not so sure whether zelle refusing to hand over recipient information is a bad thing. If I'm selling something on facebook marketplace, I wouldn't want my counterparty to get my dox just because they cried foul. I'd want a judge to examine the request before zelle hands over my info.
It’s the price you pay for instant money in your account. I mean you want quick settlement or 3-4 days to access your money.
Pros and cons. The consumer is at risk, well don’t be an idiot consumer. No different than giving someone cash and them running away.
Pros and cons. The consumer is at risk, well don’t be an idiot consumer. No different than giving someone cash and them running away.
People understand giving someone cash, though.
Zelle is implemented in a confusing way that's begging for fraud.
Zelle is implemented in a confusing way that's begging for fraud.
What is confusing about Zelle?
This is BoA’s page on Zelle, and it seems very clear to me:
https://www.bankofamerica.com/online-banking/mobile-and-onli...
Wells Fargo’s is similar.
https://www.wellsfargo.com/online-banking/zelle/
Wells Fargo FAQ:
> What protections do I have when I use Zelle®?
>You are protected in the unlikely event an unauthorized user accesses your consumer accounts and initiates payments using Wells Fargo Online or Wells Fargo Mobile.
>However, because Zelle® is intended to replace instances where cash and checks are being exchanged, you do not have the same protections associated with a credit card or a debit card transaction, such as the ability to dispute purchase transactions. Once you send money with Zelle®, you cannot cancel the payment if your recipient has already enrolled. Neither Wells Fargo nor Zelle® offers a protection program for any authorized payments made with Zelle® – for example, if you do not receive the item you paid for or the item is not as described or as you expected.
>We recommend you only send money to known and trusted recipients when using Zelle®.
This is BoA’s page on Zelle, and it seems very clear to me:
https://www.bankofamerica.com/online-banking/mobile-and-onli...
Wells Fargo’s is similar.
https://www.wellsfargo.com/online-banking/zelle/
Wells Fargo FAQ:
> What protections do I have when I use Zelle®?
>You are protected in the unlikely event an unauthorized user accesses your consumer accounts and initiates payments using Wells Fargo Online or Wells Fargo Mobile.
>However, because Zelle® is intended to replace instances where cash and checks are being exchanged, you do not have the same protections associated with a credit card or a debit card transaction, such as the ability to dispute purchase transactions. Once you send money with Zelle®, you cannot cancel the payment if your recipient has already enrolled. Neither Wells Fargo nor Zelle® offers a protection program for any authorized payments made with Zelle® – for example, if you do not receive the item you paid for or the item is not as described or as you expected.
>We recommend you only send money to known and trusted recipients when using Zelle®.
Every bank gets to implement it differently. The Zelle app on my phone just tells me to open my bank's app and do it there. You can send money to someone who doesn't have Zelle and they'll get an phishing-esque invite email or text.
The worst aspect is that scammers can send you money that does bounce back (because it was an unauthorized transfer from another victim, the one scenario in which they'll reverse transactions), but your money doesn't bounce back because it was authorized.
The worst aspect is that scammers can send you money that does bounce back (because it was an unauthorized transfer from another victim, the one scenario in which they'll reverse transactions), but your money doesn't bounce back because it was authorized.
The Zelle app is confusing: It exists specifically for people who use a bank that does not integrate with Zelle.
Chase also says similar things. And shows a warning on the entirety of the Zelle flow that alerts about scams.
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My friend also somehow had his Zelle compromised and then there also wasn't any ability for recourse. So now he removed all his online money services including Venmo, etc out of fear. Definitely not a great setup even if it is super nice to have instant deposits.
I have a [email protected] address. I get a lot of misdirected emails for others with the same name; usually I ignore them. It's linked to a Zelle account and one day I received an unexpected $500 deposit.
I asked my bank if it could be reversed. They said no, but I could return it to the sender by initiating a new Zelle transfer. The transaction only showed the sender's name; I asked my bank if they could provide me with a Zelle address, and they said no, I needed to ask the sender for that information.
This was obviously impossible and the whole situation smelled fishy. I let it sit for a few days, and got an email from someone with the same name, asking for their $500 back. It was a lot of money to them, they made a mistake, and their bank wasn't helping them recover it at all. I couldn't decide if it was a scam or not. I ended up sending $500 to the address I received the email from. They thanked me profusely, and I never heard about it again.
I asked my bank if it could be reversed. They said no, but I could return it to the sender by initiating a new Zelle transfer. The transaction only showed the sender's name; I asked my bank if they could provide me with a Zelle address, and they said no, I needed to ask the sender for that information.
This was obviously impossible and the whole situation smelled fishy. I let it sit for a few days, and got an email from someone with the same name, asking for their $500 back. It was a lot of money to them, they made a mistake, and their bank wasn't helping them recover it at all. I couldn't decide if it was a scam or not. I ended up sending $500 to the address I received the email from. They thanked me profusely, and I never heard about it again.
This is unacceptable and should be corrected to allow a transaction to be reversed, otherwise a recipient is at risk for a scam.
How did the sender find your email address to contact you?
Zelle recipients are specified by email address or phone number. They sent the email to the same address that they sent the Zelle transfer to.
Instant ACH, what could possibly go wrong?
Some fraud is a cost of instant payment infra. It must be built into the P&L of the system, with robust controls to prevent what can be prevented. Security and convenience must intersect, it’s just a matter of sussing out that point.
The fact that ACH takes 3 days is actually because the original protocol was file and FTP based, where one bank would upload the transfer as a file to another's, and the other would return a file with exceptions or something within 3 days. If the first bank didn't see a file with exceptions in 3 days the first would actually wire the money. Money can move way faster and fraud can be detected, obviously some time for human intervention is good too but that wasn't baked into the solution on purpose as much as it was just a terrible protocol to begin with.
> because the original protocol was file and FTP based
As if that's not largely how it still works today? :sad-face:
As if that's not largely how it still works today? :sad-face:
Now the 3 days is beneficial to banks since whichever bank is holding the funds can claim the interest due on it.
By that logic it works the other way too. They miss out on interest on funds that were delayed in being sent to them.
Prisoner's dilemma. slow-slow is the stable equilibrium point, even though fast-fast is just as good or better. The other 'prisoner' can always beat your fast by going slow, so they pick slow so they can't lose.
But ACH isn't an ungoverned system where parties get to just behave in their own best interest. It, and the timing/behaviour, are governed by the NACHA Operating Rules.
If you are being a bad party and failing to submit transactions on time so that you can collect a bit of extra interest, you are going to get a very large hammer brought down on you.
If you are being a bad party and failing to submit transactions on time so that you can collect a bit of extra interest, you are going to get a very large hammer brought down on you.
Nobody said anything about not being on time. Just not fast.
I wonder how much reversal power will be possible with FedNow, releasing mid 2023. https://www.federalreserve.gov/newsevents/pressreleases/othe...
I didn't know that Zelle was a thing until one of my credit card issuers recently sent me an email along the lines of "don't use it, it's only for fraud". I immediately assumed that it was because they were sad that they weren't included in the alliance or something like that. They maybe have their competing service that they want to "win" instead, and the marketing department is now making it my problem. Turns out: nope. Not their angle. Their customers are losing money right and left and are unhappy about it, so at least they're trying to warn everyone.
A few days after this email, I got a frantic call from my Mom saying that someone stole $5000 out of her bank account, and the bank won't reverse the transaction. It turned out that someone called her claiming to be some antivirus software provider, convinced her to share her screen, and transferred out a chunk of money with Zelle. The email I got, and her bank, both warned that it was irreversible. And thus far, it seems unable to be reversed.
To me, this violates a fundamental assumption of banking. If someone takes your money without your consent, you typically have recourse through customer service (often works) and the legal system (almost always works, but costly). This fundamental assumption was thrown away overnight without informing anyone about it. One day, you log into your bank and maybe you can pay a bill to a known physical address. The next day, people in other countries can drain your entire bank account. It's kind of a shock; no 2FA rollout, no way to opt out, just a ticking time bomb that came out of nowhere. My bank has it; nobody ever told me about it.
My takeaway is that people aren't really ready for irreversible bank transactions. They have literally no way to understand what that even means. Sure, there's crypto, but most cryptocurrency users are pretty technical, and knew they were entering untested waters, and did so with extensive education. It has simply never been a thing in the "traditional" financial world.
The problem here, then, is that people don't associate things like "screen sharing" with taking money. They have had weird charges on their credit card before, and in those cases, called their bank and the charges were instantly forgiven. So they protect their computer with that level of security; "if I allow this screenshare, I might get a virus or worst case, something bad might happen and I'll have to make a call to my bank within 6 months after reviewing my statement". Zelle moved the goalposts; if someone uses your unlocked workstation or guesses your 4 character password, all your money is gone with no legal repercussions.
I think this is maybe fine if you opt in to be an early adopter, or your bank rolls out crypto-like payments with the requirement that you enable 2FA and have a 239847 character password every time you transfer money, but it doesn't seem like they did any of that. They just turned a safe system into an unsafe system while nobody was watching. Congress should look into that; the implementation was botched and innocent people were hurt.
(I shouldn't have to say this, but people being scammed aren't idiots. My Mom has a PhD and has written multiple scientific papers. She is a little too trusting of people claiming to help with computers and honestly doesn't understand the computery world. But I blame us, the people that make those systems and that software, not her. Ordinary people just want to send email and pay some bills in between their lives real demands. We have fucked it up severely, and the banks did a particularly bad job here. Windows Hello asking "Enter your PIN" before sending money would have stopped the screenshare attack. There's more security required to look at my Grafana dashboard that shows the humidity level of my 3D printing filament than there is around stealing $5000. That's egregiously irresponsible, and victim blaming isn't going to do anything other than ensure that the field of software dies.)
A few days after this email, I got a frantic call from my Mom saying that someone stole $5000 out of her bank account, and the bank won't reverse the transaction. It turned out that someone called her claiming to be some antivirus software provider, convinced her to share her screen, and transferred out a chunk of money with Zelle. The email I got, and her bank, both warned that it was irreversible. And thus far, it seems unable to be reversed.
To me, this violates a fundamental assumption of banking. If someone takes your money without your consent, you typically have recourse through customer service (often works) and the legal system (almost always works, but costly). This fundamental assumption was thrown away overnight without informing anyone about it. One day, you log into your bank and maybe you can pay a bill to a known physical address. The next day, people in other countries can drain your entire bank account. It's kind of a shock; no 2FA rollout, no way to opt out, just a ticking time bomb that came out of nowhere. My bank has it; nobody ever told me about it.
My takeaway is that people aren't really ready for irreversible bank transactions. They have literally no way to understand what that even means. Sure, there's crypto, but most cryptocurrency users are pretty technical, and knew they were entering untested waters, and did so with extensive education. It has simply never been a thing in the "traditional" financial world.
The problem here, then, is that people don't associate things like "screen sharing" with taking money. They have had weird charges on their credit card before, and in those cases, called their bank and the charges were instantly forgiven. So they protect their computer with that level of security; "if I allow this screenshare, I might get a virus or worst case, something bad might happen and I'll have to make a call to my bank within 6 months after reviewing my statement". Zelle moved the goalposts; if someone uses your unlocked workstation or guesses your 4 character password, all your money is gone with no legal repercussions.
I think this is maybe fine if you opt in to be an early adopter, or your bank rolls out crypto-like payments with the requirement that you enable 2FA and have a 239847 character password every time you transfer money, but it doesn't seem like they did any of that. They just turned a safe system into an unsafe system while nobody was watching. Congress should look into that; the implementation was botched and innocent people were hurt.
(I shouldn't have to say this, but people being scammed aren't idiots. My Mom has a PhD and has written multiple scientific papers. She is a little too trusting of people claiming to help with computers and honestly doesn't understand the computery world. But I blame us, the people that make those systems and that software, not her. Ordinary people just want to send email and pay some bills in between their lives real demands. We have fucked it up severely, and the banks did a particularly bad job here. Windows Hello asking "Enter your PIN" before sending money would have stopped the screenshare attack. There's more security required to look at my Grafana dashboard that shows the humidity level of my 3D printing filament than there is around stealing $5000. That's egregiously irresponsible, and victim blaming isn't going to do anything other than ensure that the field of software dies.)
It is not a misdesign, but an intentional one. A payment system can protect the buyer/sender or the seller/receiver (or expensively both aka escrow), as any of them are capable of committing fraud.
Zelle favors the receiver, which is convenient in some scenarios like sending to a family member on a whim.
If you want sender protection, use a credit card. With the restriction that KYC/merchant rules apply to the receiver, restricting supply.
Zelle favors the receiver, which is convenient in some scenarios like sending to a family member on a whim.
If you want sender protection, use a credit card. With the restriction that KYC/merchant rules apply to the receiver, restricting supply.
> To me, this violates a fundamental assumption of banking. If someone takes your money without your consent, you typically have recourse through customer service (often works) and the legal system (almost always works, but costly). This fundamental assumption was thrown away overnight without informing anyone about it.
Yes. Which is why I won't use Zelle or PayPal with an account connection.
A friend runs a bank branch. She had four clients in one day who'd been scammed. Some despite SMS 2FA. Someone had convinced a cellular provider to issue them a new SIM card for an existing number.
Yes. Which is why I won't use Zelle or PayPal with an account connection.
A friend runs a bank branch. She had four clients in one day who'd been scammed. Some despite SMS 2FA. Someone had convinced a cellular provider to issue them a new SIM card for an existing number.
Seems odd to lump in PayPal with Zelle here. PayPal-esk protections are what are being argued for.
>convinced her to share her screen
>without your consent
>people aren't really ready for irreversible bank transactions. They have literally no way to understand what that even means
Normal bank wire transfers are irreversible. At certain age family should take care of their oldest and take away their ability to harm themselves. Car keys is another example, especially in countries with no oversite over senior drivers (hello CA where you can renew online while 70 and legally blind & bed bound).
>without your consent
>people aren't really ready for irreversible bank transactions. They have literally no way to understand what that even means
Normal bank wire transfers are irreversible. At certain age family should take care of their oldest and take away their ability to harm themselves. Car keys is another example, especially in countries with no oversite over senior drivers (hello CA where you can renew online while 70 and legally blind & bed bound).
As I understand it, Zelle is fully subject to Reg E, and the transfer you are describing was not initiated by the victim. If 30 days have not elapsed, contact Zelle and the bank and tell them that, per Reg E, they must issue a refund. You can escalate to their legal team, to the regulators, and/or to small claims court.
This isn’t Europe where excuses like “the EMV chip says the transaction was valid, so it must be valid” supposedly fly. Reg E has no carveout for “well, we put really expensive locks in the door, but the bad guy came in the window.”
This isn’t Europe where excuses like “the EMV chip says the transaction was valid, so it must be valid” supposedly fly. Reg E has no carveout for “well, we put really expensive locks in the door, but the bad guy came in the window.”
Where are they claiming it's anything but users falling for deceptive messages? The banks won't do anything because the transaction isn't fraudulent.
Lying to people in order for them to send you money is fraud.
Duped users are victims of fraud.
Duped users are victims of fraud.
Agreed. That's why the fraudster's should be tried
Using the bank records as evidence.
When someone opens an account in one's name, that's fraud on the bank, and the bank needs to pay for it until squeezing it from the scammer. When someone convinces one to send them money under false pretenses, that's on one and one needs to pay for it until squeezing it from the scammer.
When someone opens an account in one's name, that's fraud on the bank, and the bank needs to pay for it until squeezing it from the scammer. When someone convinces one to send them money under false pretenses, that's on one and one needs to pay for it until squeezing it from the scammer.
But are banks responsible for fraud? Should one make a criminal report and get your money back in a court?
No; the bank won't do anything because the transaction isn't unauthorized which is the operative word in the law.
Ok, yeah, same concept. I'm saying the transaction was initiated by the person, thus the transaction is not fraud. They were defrauded into making the transaction, but the fraud happened with the person, not the bank.
Right but the distinction is important - c.f. the confused people on the other branch on the thread.
A good ole finger wag oughta learn em to not be professional fraudsters. Yeah. Worked real well with all the non-binding suggestions put in to law post-2008 banker scams.
We're just gonna pretend Warren didn't propose and found the CFPB, are we?
CFPB is amazing. I had an employer sponsored HSA account from PNC, and PNC reps were giving me the run around about transferring money to another HSA custodian.
Sent one message on CFPB website describing my problem, and the next day I got a call from a “VP” at PNC letting me know my issue was resolved.
A simple matter that could have been solved if PNC had intended their customer service agents to actually solve my problem, but I assume was left unaddressed because transferring funds out is not of any benefit to PNC.
Sent one message on CFPB website describing my problem, and the next day I got a call from a “VP” at PNC letting me know my issue was resolved.
A simple matter that could have been solved if PNC had intended their customer service agents to actually solve my problem, but I assume was left unaddressed because transferring funds out is not of any benefit to PNC.
I had a similar experience with the California PUC. Sprint raised the texting rate so I tried to cancel my plan. Their service rep wanted to charge me for breaking my contract but I pointed out that any material change to my contract is grounds for breaking the contract -- basically Sprint broke the contact first. The rep tried to offer me another plan that gives me a similar rate but would entail me signing onto the new plan. I argued that wasn't acceptable. He refused to budge and kept saying because he offered me another plan it's not material change, which is total BS.
I finally called the California PUC. They routed my call to Sprint's Executive service line and 5 minutes later I was free from the contract and got to keep my phone. Without a body like the PUC the power is entirely in the hands of the big corporations. The cost (in time and/or money) for me to fight Sprint legally is going to be more than the contract was worth but it's still something. I'm sure that's all part of their calculus.
I finally called the California PUC. They routed my call to Sprint's Executive service line and 5 minutes later I was free from the contract and got to keep my phone. Without a body like the PUC the power is entirely in the hands of the big corporations. The cost (in time and/or money) for me to fight Sprint legally is going to be more than the contract was worth but it's still something. I'm sure that's all part of their calculus.
> CFPB is amazing.
I agree. I just worry that the current Supreme Court would gut the bureau and similar, pro-consumer bodies.
https://www.whitecase.com/insight-alert/us-supreme-court-rul...
https://www.whitecase.com/insight-alert/us-supreme-court-rul...
CFPB is one of the few departments in government that are actually incredibly functional. Probably one of the best things to come out of American governance in a long time
She did and has done a handful of other great things from her Senate seat. She also does very strong finger wags with the rest of them. Not aware of my denial of said org. Can you please quote? Or did you just do a strong finger wag at me :)
I want to add a rule to Senate/House committee procedures that you can't say a damn thing that isn't followed up with action. Their job is to VOTE on shit, not give their opinion.
I want to add a rule to Senate/House committee procedures that you can't say a damn thing that isn't followed up with action. Their job is to VOTE on shit, not give their opinion.
Yeah. If the only bank they had prosecuted wasn't tiny Abacus, with its excellent low delinquency rate, they could "learn em."
When governments' motto became "too big to fail," they lost every right. And they signaled even banks not doing it, that it is a good idea to do so.
When governments' motto became "too big to fail," they lost every right. And they signaled even banks not doing it, that it is a good idea to do so.
Wells Fargo has systemic corruption and needs to lose it's Charter.
Get outta here the same bank caught laundering for cartels? No way.
Wrong bank
That's "Failure to monitor suspected money laundering".
HSBC offered money laundering directly to mexican drug cartels and was fined 1.9 billion dollars.
https://www.investopedia.com/stock-analysis/2013/investing-n...
HSBC offered money laundering directly to mexican drug cartels and was fined 1.9 billion dollars.
https://www.investopedia.com/stock-analysis/2013/investing-n...
Wells Fargo and Bank of America are horrible banks. They deserve to go bankrupt and disappear. And anyone working at these places are despicable.
I don't understand how Wells Fargo executives avoided being personally indicted for thousands of counts of fraud, for their previous activity, ordering underlings to create fake credit card accounts for poor customers and then suck them dry.
Similarly, I can’t imagine why anyone still banks with them.
She calls out scenarios where people willingly sent money to someone over Zelle themselves. This wasn’t a compromised account; it was people being conned by other individuals (think Nigerian Prince). Why should Zelle be on the hook for someone being stupid? They did exactly their job.
Should the US Mint refund me money if I gave a fraudster cash?
Update: Love the comments below folks. I get it now.