Zelle Fumbling Fraud Response

Policy on fraud turns off smaller banks

Photo by Campaign Creators on Unsplash

Even as bank-to-bank payment system Zelle faces competition from newer peer-to-peer payment systems, the company is struggling to develop a fraud response that will allow it to expand its customer base.

Of Banks and Zelle and Fraud

Frankly, Zelle needs to assure customers that they won’t be liable for fraud while also protecting banks from the risks of fraudulent transactions.

News reports have highlighted the lack of fraud protections in Zelle, and Congress has been taking notice.

Now, American Banker reports that Zelle is rolling out a fraud protection solution — but its one that leaves banks on the hook for cash.

While that’s a risk big banks may be willing to take in order to keep their customers, community banks may struggle to absorb that risk.

As AB notes:

Reports that Zelle is in talks with banks to standardize refund practices for certain types of fraud come after a handful of high-profile class actions were filed earlier this year…