Venmo scared the sh*t out of the banks, so it was only a matter of time before they launched an alternative.
The app, created by America’s 7 largest banks in 2017, supported $490B in transfers in 2021 — more than 2x Venmo’s total ($230B).
But, as the Notorious B.I.G. said, mo money…
… brings mo problems. Per The New York Times, Zelle has become a scammer’s paradise, and the banks aren’t rushing to help.
Scammers love Zelle because payments hit immediately, unlike most bank transfers, which take 1-2 days to clear (AKA enough time for a victim to realize they were duped).
This has led to a flurry of scams on the platform, including:
- Romance scams, which reached record highs in 2021
- Crypto scams, which recently became the 2nd riskiest scam, per the Better Business Bureau
- “Me-to-me” scams, in which a scammer convinces the victim to give up sensitive information to gain access to their bank account
So what are the banks doing?
Not much. The federal law for electronic transfers doesn’t protect victims who transfer the money themselves — which is how most scams happen.
As a result, banks argue they aren’t liable for refunds. Unless, of course, a journalist reaches out: In multiple instances where the NYT contacted a bank that had previously told a victim “no,” the bank offered a refund.
So what can you do if you don’t have a pal at the NYT? One expert says consumers should treat Zelle transfers like they would cash. Even better — go back to cold, hard cash itself.
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