Argelys
Oriach was on his way home one evening in March when he was robbed at gunpoint.
The thief demanded his
iPhone and passcode. Oriach turned them over and fled.
اضافة اعلان
The next morning, Oriach, who lives in
New York City, said he discovered that the thief had drained $8,294 from his bank
accounts at Capital One, using multiple money transfer apps including Zelle. He
contacted Capital One, expecting the bank to refund him the stolen cash, as
required by federal law. The bank refunded only $250, saying it found no
evidence that the rest of the money was stolen. Oriach was stunned.
“I filed a police report, identified the suspect at
a precinct and even testified at a grand jury,” he said. “But none of that
seems to have helped my case.”
After The New York Times asked Capital One about
Oriach’s case, bank representatives said they had determined there was fraud
and would repay him.
“We reached out to the customer to apologize for any
additional stress this matter has caused,”
said Capital One
In recent years, payment apps like Zelle, Venmo and
Cash App have become the preferred way for millions of customers to transfer
money from one person to another. Last year, people sent $490 billion on Zelle,
the country’s most popular payments app, and $230 billion through Venmo.
But the same reasons that have drawn customers to
these apps — they are free, fast and convenient — have made them easy targets
for scammers and thieves. While banks argue that they should not have to refund
customers who inadvertently granted a scammer permission to use their accounts,
they have also often been reluctant to refund customers like Oriach whose money
was stolen. That could be a potential violation of the law.
Under a 1978 federal rule called Regulation E, banks
are required to make clients whole if their money is stolen from a consumer
account through an electronic payment initiated by another person, as in
Oriach’s case.
Since Reg E was written well before payment apps
existed, the Consumer Financial Protection Bureau last year issued guidelines
saying that all unauthorized online money transfers — meaning any payment
initiated by someone other than the customer and done without the customer’s
permission — were the bank’s liability.
But despite the updated guidance, banks in many cases
are refusing to refund customers who claim — often with supporting
documentation — that money was stolen from their accounts. The banks rarely
provide clear explanations for their decisions, leaving victims with little
recourse.
In early February, Chuck Ruoff said, a thief
transferred his mobile phone number to another device through an attack
technique called “SIM swapping”. The thief then used Ruoff’s number to extract
$3,450 through Zelle. Ruoff reported the theft as soon as he discovered it, but
his claim was denied. The bank said the transaction did not appear to be
unauthorized.
Ruoff sent the bank additional documentation,
including a police report, and asked for the case to be reconsidered. He was
told to wait 45 days for a response. When that deadline passed, he was told to
keep waiting. Ruoff spent hours on the phone for an update on his claim.
“I said repeatedly, ‘I’ve never used Zelle. I never
authorized this’,” said Ruoff, who has been a Bank of America customer for 34
years.
“I said to the lady I spoke with once, do you think
I would go to the police department and file a false report? That is a crime.”
After the Times
contacted
Bank of America, it refunded Ruoff’s money, after taking into account
additional information provided by Ruoff, said Bill Halldin, a bank
spokesperson.
Zelle is owned and operated by Early Warning
Services, a company based in Scottsdale, Arizona. Early Warning is owned by
several banks, but each of the 1,600
banks and credit unions that offer Zelle uses its own security settings and
policies.
Neither the banks nor Early Warning publicly release
any data on fraud, so it is hard to tell how prevalent theft is on Zelle. Incidents like the ones
described by Oriach and Ruoff are “rare” and make up a small portion of the activity
on the platform, said Meghan Fintland, a spokesperson for Early Warning.
In a survey of nearly 1,400 people whose accounts
were accessed without their consent last year, one-quarter said Zelle or other
payment services were used to make unauthorized money transfers, according to a
report by Shirley Inscoe, a financial services consultant.
Outright theft is just one aspect of the much bigger
problem of fraud on Zelle and other payments apps. In March, the Times reported
that scammers often trick people into making payments themselves — such as by
posing as bank employees or selling fraudulent goods. In those cases, banks
usually refuse to make refunds, arguing that since customers themselves
initiated the transfer, it is not “unauthorized” under the definition of the
law.
Some lawmakers are beginning to take note.
Asked by the House Financial Services Committee
about surging online payment scams after the Times report, Rohit Chopra,
director of the consumer bureau, said that “fraud is piling up, and it is a
major problem”.
Customers have filed separate lawsuits seeking class-action
status against different banks, claiming
that the lenders did not do enough to protect consumers from fraud on payment apps.
Wells Fargo and Capital One
declined to comment. Bank of America said it disagreed with the allegations.
Read more Technology
Jordan News
.jpg)
.jpg)
