Congress is grilling Zelle and some major banks over massive losses from payment scams. Senators Elizabeth Warren and Richard Blumenthal, along with Representative Maxine Waters, are demanding answers.
Millions Lost to Scams
The lawmakers are particularly focused on JPMorgan Chase, Bank of America, and Wells Fargo, which handle the lion’s share of Zelle transactions. They’re concerned about a staggering $870 million in consumer losses due to scams, many originating on social media. A previous lawsuit even accused Zelle of inadequate fraud protection.
Reimbursement Rates Plummet
A separate investigation revealed that the three big banks significantly reduced their reimbursement rates for scam victims – from 62% of disputed transactions in 2019 to just 38% in 2023.
Demand for Action
The lawmakers are demanding data on scam frequency, reimbursement policies, and fraud prevention measures from Zelle and the involved banks. They’re urging banks to follow JPMorgan Chase’s example, which recently started blocking Zelle payments linked to suspicious social media accounts. They warn that failure to improve security and transparency could lead to stricter government regulations.
Zelle’s Response
Zelle admits that fraud occurs, but insists it’s rare, claiming that the vast majority of transactions are completed without problems. However, the sheer volume of Zelle transactions means even a small percentage of fraudulent activity represents a significant amount of money.