Fraud, Fraud cases rise in cell, Senate report finds

NEW YORK (AP) – Incidents of fraud and scams are on the rise at the popular peer-to-peer payment service cell, according to a report released by Senator Elizabeth Warren’s office on Monday, giving the public a first glimpse of the growing problems at cell .

The report also found that the big banks, which partially own the cell, are reluctant to compensate customers who have been victims of fraud or scams. For example, less than half of the money customers reported sent unauthorized via cell was refunded.

Warren, D-Massachusetts, a longtime critic of the big banks, requested data on cell fraud and fraud from seven banks beginning in April. The report cites data from four banks, which reported 192,878 cases totaling $213.8 million in 2021 and the first half of 2022, in which a customer claimed they were fraudulently tricked into making a payment . In only around 3,500 cases, these banks refunded the customer, the report said.

Additionally, in cases where clear funds were withdrawn from a customer’s account without authorization, only 47% of those dollars were ever refunded.

Since its launch in June 2017, Zelle has become a popular way for bank customers to send money to friends and family. Nearly $500 billion in funds were sent through cell in 2021, according to Early Warning Systems, the company that operates cell.

Cell is the banking industry’s answer to the growing popularity of peer-to-peer payment services such as PayPal, Venmo, and the Cash App. The service allows a bank customer to instantly send money to a person using their email address or phone number and it is routed from one bank account to another. More than 1,700 banks and credit unions offer the service. But the service has also become increasingly popular with scammers and criminals. Once money has been sent via cell, a bank has to step in to try to get that money back.

The cases of increasing fraud and fraud at Zelle have been highlighted in previous news reports, including two from The New York Times. But these stories mostly cited anecdotal evidence. Early Warning Systems has previously said that 99.9% of all transactions take place without complaints of fraud or fraud. A group of Democratic senators asked for cell usage data after the Times report.

Banks are required under the Electronic Fund Transfer Act to repay customers when funds are withdrawn from their accounts illegally and without authorization. Banks have argued that in cases of fraud – meaning a customer’s account is somehow compromised and they send an unauthorized payment – they refund customers. Banks are more reluctant to reimburse customers who claim to have been scammed, arguing that customers would make such claims more often and it would be difficult to tell if the customer was telling the truth.

The data for individual banks shows the increase in fraud and scams. PNC Bank had 8,848 cases on cell in 2020 and is on track to have about 12,300 cases this year. US Bank had 14,886 cases in 2020 and 27,702 cases in 2021. Truist had 9,455 cases of cell fraud and fraud in 2020, up to 22,045 last year.

Warren threw fireworks last month at a congressional hearing involving most of the CEOs of the major Wall Street banks that use and partially own Cell, where she urged each of the CEOs to provide data on fraud and fraud incidents at their banks to release. The seven are: JPMorgan Chase, Wells Fargo, PNC Financial, Truist, Bank of America, Capital One and US Bank.

The hearing included a scene in which Jamie Dimon, the CEO of JPMorgan Chase, apologized to Warren for not giving her the requested data and promised she would have it by the end of that day.

Warren’s office says JPMorgan’s data on Cell ultimately did not provide the data they were looking for, so data from JPMorgan is not included in the report. The other banks that did not provide data to Warren’s office were Wells Fargo and Capital One. JPMorgan and Early Warning System have not returned a request for comment. Fraud, Fraud cases rise in cell, Senate report finds

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