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Comment by costco | Hacker News Reader

Due to Zelle's low transaction limits the amount lost in Zelle scams is hardly worth noting. Every bank already has a warning page before you use Zelle telling people what to look for in scams but based on this report it appears people are ignoring it. The losses from investment scams are much more worrying. I think all consumer bank accounts should require a mandatory two hour anti scam educational video before any outbound transfer > $10000 can be made.

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That’s an elitist world view / statement. More than half of Americans have less than $500 in savings: https://www.gobankingrates.com/saving-money/savings-advice/n...

There is no way to do what the senators want without undermining the entire point of Zelle. If there are chargebacks then there needs to be a dispute resolution system and higher fees to compensate. These are authorized payments, banks are already obligated to reimburse all unauthorized payments.

Yep, people are about to learn that those credit card fees actually buy you something.

Credit card fees, like insurance rates, are staggeringly high to cover all the crime and fraud. Just hope someday those companies don’t have to have their own law enforcement teams to go after the criminals who cause all that fraud and crime.

Most of the fee goes back to customers in the form of cash back and loyalty points. The networks only get some 0.3% ish, the rest goes to the issuing banks. That's why you can get a no-annual-fee 2% cash back card like the Citi Double Cash.

Debit cards that fall under the Durbin amendment to the Dodd-Frank act only charge 0.05% + $0.21

Well several years ago I was a merchant, and every time I was victim of a fraud the Credit Card companies took their money from my payments, so those fee's did not cover the fraud at all. Not only was I out the product, I was also out the Money, and fee's a double whammy.

So I 100% disagree that the " credit card fees actually buy you something" because all they do it push the liability on to the merchant.

Visa and Mastercard is not covering the costs of fraud

I think the general idea is credit cards take care of the card holders. They've certainly always have taken care of me. And merchants are supposed to take care of themselves by raising prices. The system is certainly not perfect but seems to mostly work.

I don't think you are getting the Senate report's point. It's titled "How Consumers Defrauded on Zelle are Left High and Dry by the Banks that Created It"

When you say it would undermine the entire point of Zelle, I don't think that's the Senate's concern. I think the Senate's concern is that banks have created a money transfer system where they eschew their legal obligation to reimburse all unauthorized payments.

But a payment as part of a fraud is often an nauthorized payment. This is what people don't realize. An authorized payment is one that you agreed to make; if you didn't get what you expected in return, that doesn't make the payment unauthorized.

Banks have no legal obligation to refund authorized payments, any more than they have obligations to refund people who took cash out of ATMs that they lost as part of a fraud.

The third bullet point on the first page says that the kind of fraud involved includes hacked accounts, which is the most classic type of unauthorized payment:

> Banks are not repaying customers who contest “unauthorized” Zelle payments – potentially violating federal law and CFPB rules. Zelle claims to have a “zero liability policy” for cases in which a bad actor gains access to a consumer’s Zelle account and uses it to make unauthorized payments, and the Electronic Fund Transfer Act (EFTA) and the Consumer Financial Protection Bureau’s (CFPB) “Regulation E” require that the banks repay customers when funds are illegally taken out of their account without authorization. But the data provided by the banks revealed that they reimbursed consumers for only 47% of the dollar amount of cases in which customers reported unauthorized payments on Zelle in 2021 and the first half of 2022.

That number doesn't really tell you anything. I mean, 23% of people admit to committing friendly fraud via credit card chargebacks.

I'm not sure how that's actually a response to what I wrote. You are just disputing some categories of payments. It has nothing to do with the fact that the banks created a money transfer system where they eschew their legal obligations.

You'll have to be more specific about what you think their legal obligations are, then. As far as I'm aware, Regulation E requires banks to resolve errors appropriately, including unauthorized transfers. It does not require them to reverse arbitrary transfers, including ones where a fraud was perpetrated on their customer.

The report is explicit about it, I'm not sure why you are having difficulty with that. The report mentions, for example, when their accounts are hacked. That's just one example. Are you confused or are you just being obtuse? Someone else provided this exact answer to your identical question, upthread, prior to your asking me the same exact thing here again.

I see other comments here saying it's intended to be digital cash, but as a programmer it makes no sense that we Zelle users cannot find out the identify and ultimate destination on the other side of the funds transfer - it's also annoying that the USA doesn't have a simple bank transfer system like many other countries do.

About 4 years ago, I got scammed when I sent a payment to a local preschool and later found out the preschool did not receive those funds. Someone was illicitly reading their emails and and also had control of a discarded email address the school no longer used and routed my Zelle payment to the bank account associated with that. The school suspected a former employee, but nothing ever came of it even though there was a police report and I also filed a complaint with the feds. A police officer called me several months later to say the case had ended up in his lap but he didn't see a way to do anything about it. Chase had multiple meetings with me, and they even knew which bank the funds had been transferred to, so it made no sense to me that there was nothing that could be done to retrieve the funds. Eventually the whole saga just ended with no resolution, and I figured if that person was so desperate they probably needed the money more than me.

Anyone have more insight into the underlying mechanics and why we can't confirm recipient identity/account as a Zelle user?

> ... it's also annoying that the USA doesn't have a simple bank transfer system like many other countries do.

FedNow is here and live.

For a couple of initial test institutions in limited cases.

It's coming, but it's not really "here and live" fully yet.

Not everywhere I guess but US Bank, Wells and JPMC have it [1]. Whole bunch more have RTP too. [2]

[1] https://www.frbservices.org/news/press-releases/072023-fedno...

[2] https://www.theclearinghouse.org/payment-systems/rtp

Lots of other countries offer direct to consumer rails. I think fednow is an absolute improvement over ACH but it’s still way behind some of the peer payment systems out there.

FedNow is live, but not quite "here" since I can't personally send money to my neighbor with it yet. I'll be interested to see how the implementation looks to an end user such as myself, and how I can verify the identity/destination of the recipient. A little over a month ago, the Los Angeles Times said JPMorgan Chase would offer it soon. The JPMC website has a page about how people can implement it through their platform. However, when I log into my Chase account and search for fednow, this is what I get:

You asked: "fednow"

We're sorry but we need more details to give you a complete and accurate answer. Can you please rephrase your question?

https://www.jpmorgan.com/payments/solutions/fednow

https://www.latimes.com/business/story/2023-07-29/heres-now-...

https://www.frbservices.org/financial-services/fednow

FedNow is not a service for end users. It's a service for banks.

Yeah, the ostensible reason is to be 'digital cash', but the more accurate reason is that it was created by the banks to shift the liability nexus to customers.

You'd need to go through the legal process ie: get a court to issue a subpoena to Chase to get to the other bank, then to the other bank to get the customer info, then you sue the other customer.

I'm not sure if it would be you or the officer.

The banking system is supposed to know who everyone is, which is the point of the KYC regulations. Extracting that information out of them is work.

I don't think that one can't add security and verification, etc. I think the issue is those things are not free and it is supposed that adding them would just transform Zelle into something more akin to a credit card, which we already have.

In your example it seems you did actually send it to the school. The problem was an additional party also had access to school accounts, even if old. To me that's equivalent to a former employee having an illicit copy of keys to the till and stealing cash from it in the off hours. Police would probably treat that crime similarly.

At the end of the day the police have to prioritize their resources too. Technically they could "do" things. But is it worth the cost? When it comes to petty crimes it seems mostly the answer is no, and I have to agree. Even when I had my own phone pick pocketed. It sucks but life goes on.

I agree with you. It was just fascinating to me how in hindsight I couldn't access the full digital trail of those funds and other people wouldn't just reveal it to me on account of privacy. As other people have pointed out, the courts would be needed, because even though I showed them evidence with some screenshots, etc, I suppose I could have fabricated those to cause trouble for someone.

The cops don't care enough to do the paperwork and get the subpoenas. Next time suggest that the ex school employee is a terrorist. The KYC compliance and financial crime divisions won't get activated if you don't push the issue. Your average city cop just doesn't give enough of a damn. The paper trail and financial surveillance systems are there, you just have to make them pursue it.

My banks Zelle integration tells me the name of the other account and will specifically alert me if my Zelle "contact" name is different than the actual name on the account.

>>Higher fees to compensate

Really?

My bank was charging me $40/month just to have the service active to use it for occasional payments. I did not even realize that using it once "subscribed" me to the service, and fortunately was able to have months of bogus fees reversed.

Plus, it was not even actually all that convenient.

Just skim the report. It id damning.

One thing I learned a long time ago:

Never mistake a bank (or banker) for a friend, no matter how much they try to market their "friendliness". They may sometimes be necessary or even useful, but they are never your friend when it comes down to it.

The entire foundation of the US banking system is directly opposed to the claimed point of Zelle. Which is why any business that wants to convert the very "soft" money of the banking system into anything harder (eg cryptocurrency) inevitably needs to plan for and eat losses.

I'm somewhat sympathetic with your point as applied to fraudulently induced yet properly authorized payments. But it's utterly untenable when talking about unauthorized payments from someone else gaining access to a bank web interface and things like that - the security posture of banks and the security properties they expose to customers would have to change drastically to change that. And frankly assuming a system already has to deal with the second kind, dealing with the first carries basically the same burden.

Whenever I see that it's always less than $x in a savings account which would include me. My net worth is high 6 figures and I have 50k ish of CC availability. So completely meaningless.

Edit: ok this one says it's a survey. But the results are that overall 58% don't have 500 in savings, but young people are actually doing better with only 39% of 18-24 year olds having less than 500. I'm not buying that.

Low transaction limits? I regularly send $xx,xxx through zelle. Guess I got to up my game..

Do you have a business account? I have a $1500/day limit. Looking it up it seems like for popular banks it tops out at $2500/day, and some go as low as $500/day.

How privileged is it to say that a $1500 loss is "hardly worth noting"? Median take home pay is under $45k, so that's more than half of the median paycheck gone in a single mistake.

Obviously for an individual person it can be bad, bad enough to cause problems that take months to solve, but not lose your life savings and retirement bad. The report identifies a few hundred million dollars in losses but my point is more that for instance there are single "pig butchering" case losses in the millions (and totals in the billions, which is likely an underestimate because some people feel too ashamed to report to ic3.gov) and not much is being done in the way of educating people on how to avoid being swindled.

At which bank?

The highest available limit I can find is $5,000 per day, and that's limited to private clients and businesses:

https://www.gobankingrates.com/banking/mobile/zelle-limits/

Common limits vary between $500 and $2,500 as you can see.

I've never heard of anyone being able to use it to send $10K in a single transaction, so it would be very helpful to know where you can do that.

My business account says: "Daily limit: instant delivery $7,000"

BofA/ML appears to have default limits of $15k/day for wealth management clients, and $25k/day for private bank clients, though there is a footnote stating that limits may actually be higher depending on the client. So at least for BofA/ML, they seem to essentially make higher transfer limits dependent on how much you're paying them in management fees.

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