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Comment by cle | Hacker News Reader

> irreversible transfer

Apparently they're not irreversible...

They're irreversible, except "unauthorized" transactions.

Most scammers generate authorized transactions via trickery. Banks won't accept "I was tricked" as "unauthorized"; they only count cases of actual account compromise, and even there... https://www.cnn.com/2022/10/03/business/nightcap-zelle-fraud...

> The bank data reviewed by Warren’s office suggest even the bulk of unauthorized cases are going unpaid. For example: PNC Bank indicated that its customers reported 10,683 cases of unauthorized payments totaling over $10.6 million. It refunded only 1,495 cases, totaling $1.46 million.

Zelle isn't a bank, it's just a mechanism to communicate a transfer between two banks. The bank at either end of the transaction is regulated and must reverse fraudulent transactions. The fact that PNC is not reversing all of them means they just need to be subjected to additional legal process to enforce existing law.

It doesn't matter what banks accept; they are required to by the regulator. That they try to weasel out of it just means they need to be regulated harder and at more cost to the executive suit.

> It doesn't matter what banks accept; they are required to by the regulator.

Regulation E (https://www.consumerfinance.gov/rules-policy/regulations/100...): "'Unauthorized electronic fund transfer' means an electronic fund transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit."

How is "I willingly initiated a transfer to someone who turned out to be a scammer" within this definition?

Competent (non-software) professionals would read the initiation as the intent, also see comment 4 there, suggesting the mindset of the regulator. As a reminder, regulations are always subject to the interpereation of the regulator, which, as history shows in the case of regulation E, tends to side with the consumers.

There's a deeper story here though: * Banks are given a monopoly to almost literally print money. We ceded control of a very important facet of daily lives to them. * The cost for that is tight regulation, meant to make sure they keep the trust invested in them. * In the case of Zelle, and some other new products, banks, rushing to market, try to ignore their side of the deal. * Suggesting we should give up and accept that is morally, regulatory, and legally wrong. * Regulators and policy makers seem to agree with the above.

The expandable "Official interpretation of 2(m) Unauthorized Electronic Fund Transfer" section makes it pretty clear what sort of things they consider to be covered under the regulation. If they thought it covered scams, it's highly likely they'd say so there.

Elizabeth Warren's recent investigation brought this up as an issue, as well. I think regulation should cover the scam use case, but it's pretty clear to me it currently doesn't.

Whenever people pushed the banks, they were made whole. The problem with any such issue is that it requires some knowledge and patience on how to get the bank to comply, and most people lack those (through no fault of their own: this isn't trivial).

> Whenever people pushed the banks, they were made whole.

That's a good strategy to keep the heat off and avoid new regulation actually being made to cover the scenario, especially when it's a rare step taken by consumers. I tend to do the same if someone chargebacks us at work; it's not worth fighting, even if we're legally in the right.

It's more of a "transactions will not be reversed by user request or due to user error".

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