From the LA Times this morning:
Wells Fargo, JP Morgan Chase and Bank of America are being sued by the embattled Consumer Financial Protection Bureau over alleged unchecked fraud on the Zelle payment app.... The result, according to the lawsuit, was fraud-related losses of more than $870 million over the last seven years.
And from the Wall Street Journal:
Evolve Bank at its peak managed around $10 billion for financial technology firms, including Stripe and Affirm.... Problems at the bank spilled into the open when a software company called Synapse went bankrupt in April.... A month later, a court-appointed mediator disclosed that as much as $96 million in fintech customer funds might be missing from accounts at Evolve and other banks.
This isn't as bad as crypto, which seems to literally require a foundation of fraud just to exist, but it's yet another example of the risks involved in allowing companies to engage in bank-like activities without actually being regulated like banks. "Even though Evolve is insured by the Federal Deposit Insurance Corp.," says the Journal, "the bank isn’t the one that failed, so deposit insurance doesn’t apply." Quite so. But maybe that's a problem for consumers who assume all this bank-like stuff comes from actual banks?
Had no idea Zelle was not all banks. Rarely use it though.
I've never used it and don't work in law or finance, so hesitate to weigh in. But yes, Zelle requires that both sender and recipient specify a bank account. It's also used more for person to person rather than, like checks sent with online banking or for that matter the sleazy firms the WSJ covers, to businesses. That makes it less likely to be used for speculative investments. So to that extent the two articles cited aren't close parallels.
Still, Kevin is absolutely right to join them as lacking consumer protection and, just when you hoped regulation would enter, that's before Trump and his cronies make unregulated and unethical profit making the norm. Scammers can use Zelle much like email, with phony invoices and the like, to lure you into sending money. And that sending of money is then just one step away.
Trump is going to try to abolish the CFPB. Stuff like this is why.
Exactly. Can't let regulation get in the way of making a buck. That would be flat out un-American.
There’s a sucker born every minute. And on social media, every millisecond. 😂
But I’m the Luddite. Oh well. Have at it kids.
My mobile phone number from work has been sold and now I get 5 or 6 “scam likely” calls every day. This is before AI gets ahold of us.
Only five or six? Count yourself lucky.
Finally, the "Do you know about the New Medicare?" calls have stopped, so we're heavily into "Your automobile accident within the last two years" and "We will give your company a loan -- how much do you want?" etc.
Not to mention the 3-7 emails I get daily notifying me that my Netflix account is being cut off.
The other problem that came up when some mid-sized banks failed was that these bank like firms would have their money in a single account that were so large that they wouldn't be fully covered by FDIC. Customers may have individual accounts at bank like entities, but the money in those account is the property of the bank like firm--there is no protection for those individual customers.
I am so tired of people complaining about Zelle. There is nothing unique about the scams with it. It is just a way to pay for stuff like checks or cash. True, it does not have the same level of protections as using a credit card does but neither does cash, money orders, or checks. The way to avoid losing money with Zelle is to not intentionally taking the action of paying a scammer. Should Zelle be a bit better about reversing transactions like some of the other payment processors, sure, but in 99+% of cases it was the customer who was at fault.
How does Zelle work, do you have to pay in person like with cash?
Funds transfer… free access to your bank account. Don’t do that!
Uh, you use a credit card or cash for literally everything? Your mortgage? Your electric bill? Your internet or auto insurance bill or car payment or property taxes?
Unless you can answer "yes," you, too, are providing "free access to your bank account."
Very nice. Enable the corruption and blame the stupid shitheads who fall for it. Even I’m not that cold. And I’m pretty cold.
So this isn't a case of fraud by the banks, but the banks not being required to do fraud protection?
Every once in a while, I see businesses that call themselves a “banc.” I always assumed they were wanting me to assume they were a bank but didn’t have the consumer protection regulations of a bank.
Crypto, I think, is more properly thought of as a commodity, but the first commodity to not represent physical, tangible materials. I'm not sure if that requires fraud or not but it certainly encourages fraud and makes it easier to pull off.
This is all on the mega banks, Wells, Chase, Citi, and BoA.
They wet their pants once they saw Venmo and Cash App taking market share. So they came up with their own platform, Zelle, to compete. But mega banks just gotta mega bank, and so Zelle has virtually no consumer protections.
Wells Fargo is in on Zelle, and Wells is a criminal operation disguised as a bank.
Venmo and Cash App are at least somewhat better for consumers than Zelle. Avoid Zelle like the plague. Avoid the big 4 mega banks like the plague. Use a local bank or a good credit union.
Local banks and credit unions have eschewed Zelle?
Is Venmo any better? They seem to have about as much fondness for privacy as Mark Zuckerberg does. Imagine a financial app where you see a feed with people you barely know happily chirping about their transactions. It's fucking mind-blowing.
There's a lot of stuff I'm not going to miss about China. Pollution for one. Or internet censorship. Or healthcare. Or ubiquitous second-hand smoke.
But I will miss their digital payments platforms. America seems truly in the dark ages on this stuff. We're behind Europe, too, not just Asia.