A few of America's largest banks are coming together to formulate a plan to reimburse customers that have been taken advantage of by scammers on their Zelle payment network.
Bank of America, JPMorgan Chase & Co., and Wells Fargo are among the financial institutions that are meeting to discuss how to go about refunding customers as well as each other for illegitimate transfers.
The goal is to bolster security and maintain consumer trust in Zelle. Zelle is co-owned by a consortium of banks, so the matter of scammers in the payment system affects all of them. Scammers have been known to attempt to deceive customers into sending them money by masquerading as a customer service agent.
Scammers will send out emails and text alerts pretending to be the customer's bank. They are even able to place phone calls to customers' phones and have the caller ID show as their bank's customer support line.
From there, the scammers attempt to persuade the customer to send money to what looks like their own accounts, but in reality, the swindler has linked that person's phone number to a fake bank account.
Banks are required to refund their customers for unauthorized transactions, but there are currently no protections in place for customers who were tricked into sending money. Because of the recent increase and cleverness of peer-to-peer scams, lawmakers and politicians have been urging banks to step in and help fraud victims.
Banks that use the Zelle network each have their own fraud policies. Some banks already have reimbursement measures in place for customers who have been tricked into sending money to a fake account.
The banks are now coming together to attempt to standardize refund procedures on Zelle. The hope is that if the banks join forces and share liability within the system with a guarantee to reimburse each other, more customers will be able to recover their funds.
The banks will first determine that a customer was deceived into sending money. If that proves to be the case, the bank that houses the deposit account where the money was sent from would return the money to the victim's account.
Capital One Financial Corp., PNC Financial Services Group Inc., Truist Financial Corp., and U.S. Bancorp will also be participating in the discussion.
Under the new rules, customers would not be able to receive a refund for goods or services they claim not to have received. Customers whose payment errors are a result of typos will also not be eligible for a refund.
Banks are shooting for the beginning of next year to roll out this new policy. They are currently running tests to ensure the alterations would not result in a new wave of scams.
This article was produced and syndicated by Wealth of Geeks.