Banks using the payment app Zelle have started refunding victims of imposter frauds in response to worries about consumer protection expressed by US politicians and the federal consumer watchdog.
According to Early Warning Services, the bank that owns Zelle, 2,100 financial institutions on the peer-to-peer network, which is owned by seven banks, including JPMorgan Chase and Bank of America, started reversing transfers on June 30 for consumers who were tricked into sending money to scammers posing as representatives of banks, government agencies, or current service providers.
Federal regulations mandate that banks pay back consumers for payments made without their consent—by hackers, for example—but not when the clients initiate the transfer.
Although Zelle announced on August 30 that it has implemented a new reimbursement benefit for “specific scam types,” a representative stated the company had not previously released information about its new imposter scam refund policy because of concerns that doing so would incite fraudsters to submit fictitious claims.
The new policy represents a significant departure from the previous one, which was implemented last year after bankers, notably Jamie Dimon, the CEO of JPMorgan, persuaded lawmakers that it was irrational to force banks to reimburse payments that their clients had been duped into authorising.
Zelle has grown to rank among the biggest peer-to-peer payment networks in the United States in terms of total payments after launching in 2017, however, incidences of fraud have left their image tainted.
