CFPB Sues America's Largest Banks For 'Allowing Fraud To Fester' on Zelle (nbcnews.com) 42
The Consumer Financial Protection Bureau is suing America's three largest banks, accusing the institutions of failing to protect customers from fraud on Zelle, the payment platform they co-own. From a report: According to the suit, which also targets Early Warning Services LLC, Zelle's official operator, Zelle users have lost more than $870 million over the network's seven-year existence due to these alleged failures. "The nation's largest banks felt threatened by competing payment apps, so they rushed to put out Zelle," said CFPB Director Rohit Chopra in a statement. "By their failing to put in place proper safeguards, Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves."
Among the charges:
1. Poor identity verification methods, which have allowed bad actors to quickly create accounts and target Zelle users.
2. Allowing repeat offenders to continue to gain access to the platform
3. Ignoring and failing to report instances of fraud
4. Failing to properly investigate consumer complaints
The CFPB's suit seeks to change the platform's operations, as well as obtain a civil money penalty, that would be paid into the CFPB's victims relief fund.
Among the charges:
1. Poor identity verification methods, which have allowed bad actors to quickly create accounts and target Zelle users.
2. Allowing repeat offenders to continue to gain access to the platform
3. Ignoring and failing to report instances of fraud
4. Failing to properly investigate consumer complaints
The CFPB's suit seeks to change the platform's operations, as well as obtain a civil money penalty, that would be paid into the CFPB's victims relief fund.
Have no fear (Score:5, Funny)
Once Musk comes into office this ridiculous agency will be done away with. After all, why should the government be responsible for protecting you from fraud? That's the job of private industry.
It's the same reason the requirement car manufacturers have to report accidents when their automated driving software was activated 30 seconds before impact will go away once Musk is in office. There's no need for the public to know this information. Only the car manufacturers need to know and choose whether to let you know of any safety issues.
Re: Have no fear (Score:1, Offtopic)
Re: (Score:1, Offtopic)
You mean President Musk who has an interest in removing the requirement [reuters.com] car manufacturers report when their cars are in accidents and their automated software was engaged. Or who wants to get rid of financial safeguards for people through the CFPB [fastcompany.com]. It's why the CFPB is working to implement a regulation which puts restrictions on data brokers which track and collect personal data before Musk takes office.
Re: Have no fear (Score:2)
Re: (Score:2, Offtopic)
President Trump will fix everything.
And it'll all come down to the meaning of "fix" ...
Re: Have no fear (Score:5, Funny)
Correction, he'll fix everything on DAY ONE. So we don't need to actually worry until day two.
Re: (Score:1)
Once Musk comes into office this ridiculous agency will be done away with.
And don't worry. All these problems will go away once X gets banking features and becomes an “everything app” like WeChat in China. /s
Search: musk X banking wechat [google.com]
And meanwhile... (Score:4, Insightful)
...my wife has had nothing but trouble trying to send money to her daughter.
I make machines for glasswork and customers report difficulty when trying to pay.
It seems that legitimate users constantly face roadblocks while scammers run free
Re: (Score:2)
Ah, the good old days when we'd send checks. And you'd also let your parents know you were short of funds before you actually ran out. Later it changed so that my mom would run out (scams) and then ask for money and be annoyed that bank transfers weren't instant.
Security is bad enough as it is then... (Score:2)
Re: (Score:2)
It is interesting what mobile banking has done. I have probably written more checks in the past five years than in the 15 before it.
The humble paper check has a lot of advantage in that banks and law enforcement alike generally take check fraud pretty seriously so someone likely will help you if something happens. With mobile banking now it is trivial to deposit most checks unless its for more money than you'd want to use something like zelle for anyway. - Endorse it appropriately, snap a few photos with
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I still use checks for most of the stuff I'm dealing with my mother, who's now in assisted living and I finally have power of attorney. She had all sorts of bogus online accounts, loans she owed but there was never any physical paperwork, secret bank accounts that scammers would use, and online payment system spams were nonstop.
But checks, checks are good. Scammes HATE checks, because it's a paper trail and evidence. Most bills in the mail can be paid with checks. Anyone asking for strange and unusual pa
Re: (Score:2)
I write one check a month -to my landlord, because she likes to be paid by a check mailed to her home.
I send one Zelle transfer a month -to my business landlord, because that is how she requested to be paid.
Most everything that I spend goes on a credit card, with the credit card being paid off monthly. It is easy, and puts a step between my bank account and whichever business I am purchasing from. Also it adds a layer of protection from card skimmers -it's Visa's problem, not mine!
My business expenses are
Re: (Score:2)
You've got these ridiculous apps ...
I don't use it but will note that you can use Zelle from within your bank's online portal, so you don't have to use a banking app. And you must have either an actual bank account, or a pre-paid credit card, from a bank within the Zelle network to use this. Your other comments are spot-on...
I thought we were just doing this? (Score:2)
If Facebook, Google, and Amazon can create ppatforms rife with fraud from which they profit, why are we just stopping the banks from doingcthe same now? I thought this was just what capitalism has become.
Re: (Score:2)
part of the whole "Mature markets" aka monopolist, gambit.
In case you were wondering (Score:2, Insightful)
Re: (Score:2, Offtopic)
I think he needs the CFPB to be the bad cop so he can step in and offer the banks a better deal to make the problem go away...paid directly to himself!
Only use Zelle with people you know... (Score:4, Insightful)
I literally only use Zelle with people I actually know. The idea of using it online to pay someone I don't know or to buy stuff with never remotely entered my mind. That's what credit cards are for.
Zelle is super useful if you want to send your friend $20 for gas but don't want to have to first go get the money and then drive it to your friend. May as well just get the gas and take that over. No thanks on either scenario when I can just Zelle my friend the $20 and be done with it.
If you are getting defrauded with Zelle, maybe stop using it for everything under the sun.
It doesn't surprise me that some folks want Zelle gone. Before Zelle, it actually cost me money to send someone money. No thanks.
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If you are getting defrauded with Zelle, maybe stop using it for everything under the sun.
But you just said it's super useful. The solution to fraud isn't to make something useful less useful by limiting its use, it's to address the underlying fraud.
The CFPB doesn't want Zelle to be gone, quite the opposite. They were an advocate of free transfers - kind of like those used in every country country.
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To address the underlying fraud would likely mean to increase security features of Zelle. Security and accessibility are on opposite ends of the spectrum. If you increase the security of Zelle, you will very likely reduce accessibility. It's always a trade off.
The problem really isn't with Zelle but rather the people posing as something they are not. Zelle is a digital way of handing someone cash. You could be a fraud victim before the Internet but now it's just so much easier.
I'm not saying we shouldn't in
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A tool can be useful and still be limited in it's scope. I like Zelle as one of the various financial tools at my disposal. For most shopping, online or off, I prefer to use my credit card. They by far have the best fraud departments. For many bills I do an e-check which uses my bank account. If I need cash, I use by debit card at trusted locations. Usually only need cash if I'm going to buy gasoline, as I get a decent discount for paying with cash. One bill I use a physical paper check.
All these methods to
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Using either PayPal or Venmo, it's never cost me anything.
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I literally only use Zelle with people I actually know. The idea of using it online to pay someone I don't know or to buy stuff with never remotely entered my mind. That's what credit cards are for.
Zelle is super useful if you want to send your friend $20 for gas but don't want to have to first go get the money and then drive it to your friend. May as well just get the gas and take that over. No thanks on either scenario when I can just Zelle my friend the $20 and be done with it.
If you are getting defrauded with Zelle, maybe stop using it for everything under the sun.
It doesn't surprise me that some folks want Zelle gone. Before Zelle, it actually cost me money to send someone money. No thanks.
I hate to break this to you... but it still costs money to send money to someone... Zelle et al. have just figured out how to do it so you don't notice. It's the same with credit cards, decades ago banks realised that making you pay for them was stopping their use so they made the merchant pay for accepting them. Zelle and other transfer apps will be doing something similar, Shirley you're not daft enough to think a private company is doing this for free.
However that's not important right now, you're 100
Great timing! (Score:1, Insightful)
The minute Trump walks into the White House, this lawsuit will disappear like teenage Ivanka whenever daddy tried to catch her getting changed. I don't know what makes me angrier, Trump's naked corruption, or the soon-to-be-forgotten Democrats who clearly knew this was going on, and waited 'til 'way too late to act. I guess we're supposed to believe those scumbags actually intended to do something about the banks, but "oh, gosh darn, the Big Bad Republicans just wouldn't let us".
They all make me sick. A
Hmm ... (Score:3)
1. Poor identity verification methods, which have allowed bad actors to quickly create accounts and target Zelle users.
You must have an actual bank account, or a pre-paid credit card, from a bank within the Zelle network (in either case), so this item seems a little fishy.
Search: bank account required for zelle [google.com]
Re: Hmm ... (Score:1)
Poor identity verification? (Score:2)
Do banks really have poor identity verification? Don't the fraudsters mostly use the infinite supply of useful idiots as money mules?
It wasn't fraud, but bad news for the payer... (Score:3)
Re:It wasn't fraud, but bad news for the payer... (Score:4, Insightful)
Were the notifications actually from Zelle, or were they only purporting to be from Zelle? If you didn't actually receive payments, it's hard to tell if the emails were just spoofed.
The US banking system stuck in the stone ages (Score:5, Informative)
In Canada everyone in the country has been able to send each other money digitally for almost 30 years.
You talk about us becoming a state, and you can't even figure out how to do banking.
Who gets the money? (Score:2)
Nobody EVER talks about that.
wrong perp (Score:2)
Of course, it's too much trouble for the government to go after the actual fraudsters. This is like holding the grocery store accountable for the fact that someone took your unattended purse from your cart.