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Zelle Fraud Is Rising. And Banks Aren’t Coming to the Rescue

NNPA NEWSWIRE — “Authorized” vs “Unauthorized:” Under a federal rule known as Regulation E, banks are technically only liable to cover fraudulent activity when it involves “unauthorized” transactions. Say, when someone steals your credit card and makes purchases without your permission. But if someone persuades you to send them $500 through a phishing scam, banks consider that “authorized” and won’t reimburse those funds.
The post Zelle Fraud Is Rising. And Banks Aren’t Coming to the Rescue first appeared on BlackPressUSA.

Published

4 years ago

October 4, 2022

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By Analysis by Allison Morrow and CNN Business | The Atlanta Voice

Zelle, the popular payment app, is under fire for how it handles (or rather, doesn’t handle) fraud and scams that have exploded on the platform in recent years.

The New York Times called Zelle out in two reports earlier this year. That grabbed the attention of US senators, who pressed the CEOs of the nation’s large banks that own the platform in hearings last month and began an investigation into the service.

Here’s the deal: On Monday, Senator Elizabeth Warren’s office said its investigation into Zelle showed that fraud and theft are not only rampant but getting worse. And once people report fraudulent transactions, banks are reimbursing only a small fraction of the swindled customers.

“Big banks own and profit from Zelle but are failing to make their customers whole for both authorized and unauthorized fraudulent activity on the platform, despite their claims that it is safe,” Warren’s office wrote.

Key things to know:

Zelle (rhymes with “tell”) was created in 2017 as the banking industry’s answer to Venmo and Cash App.
The fintech companies behind those apps were doing what big banks had failed to do for decades — make transferring money to your friend who just paid for dinner easy and free and fast.
So the big banks got together and created Zelle, which was lame and almost no one used it till around 2020, when digital payments took off in response to the pandemic.
Zelle is now by far the largest peer-to-peer payment system in America. Last year, according to Zelle, transactions totaled $490 billion, up 59% from the year before. (PayPal-owned Venmo, its closest rival, handled $230 billion.)
The service is operated by Early Warning Systems, a fintech company owned by seven of the US’s largest banks.

Naturally, where the internet and money collide is where scammers get to work.

Zelle’s size and accessibility — it’s built right into participating banks’ apps — make it the “preferred tool of fraudsters and other bad actors,” according to the report from Warren’s office.

Among the investigation’s key findings, which corroborate anecdotal evidence reported by the Times:

Banks are not repaying 90% of cases in which customers were tricked into making payments on Zelle.

An estimated $440 million was lost by Zelle users through frauds and scams in 2021. But banks “appear not to have provided sufficient recourse to their customers.”

“Authorized” vs “Unauthorized:” Under a federal rule known as Regulation E, banks are technically only liable to cover fraudulent activity when it involves “unauthorized” transactions. Say, when someone steals your credit card and makes purchases without your permission. But if someone persuades you to send them $500 through a phishing scam, banks consider that “authorized” and won’t reimburse those funds.

BUT… The bank data reviewed by Warren’s office suggest even the bulk of unauthorized cases are going unpaid. For example: PNC Bank indicated that its customers reported 10,683 cases of unauthorized payments totaling over $10.6 million. It refunded only 1,495 cases, totaling $1.46 million.

Zelle sought to downplay the report and didn’t specifically address Warren’s allegations Monday. In a statement, the company said: “Tens of millions of consumers use Zelle without incident, with more than 99.9% of payments completed without any report of fraud or scam,” adding that the proportion of fraud and scams has steadily decreased as its user numbers have climbed.

The Bank Policy Institute, a banking industry group, also disputed Warren’s findings and claimed that Zelle’s rivals Venmo and CashApp receive more reports of disputed transactions.

“Zelle is the safest peer-to-peer network,” it said in a statement Monday. “For any real discussion of online fraud, the focus belongs elsewhere.”

BOTTOM LINE

It’s kind of crazy to remember how anyone moved money among friends before the advent of payment apps. Did I actually carry cash with me? On the first every month did I take my little checkbook out and literally write out my portion of the rent on a magic slip of paper and then just hand it to my roommates? Wild. It would not surprise me if the original idea for a payments app came from a restaurant server who was fed up with splitting bills unevenly across eight different cards.

But that’s the pre-internet world Regulation E was made for. It’s a 1978 rule that only got a 21st century electronic payments update by the Consumer Financial Protection Bureau late last year. It wasn’t made for the world of instant payments, and could hardly have envisioned how easy the internet would make it to swindle people out of their money.

Warren’s report on Zelle could add pressure on regulators including the CFPB to update its guidance.

“Given this uncertain landscape and the banks’ abdication of responsibility, regulatory clarity is needed to further protect Zelle users,” researchers wrote in the report, noting that the CFPB has regulatory authority over peer-to-peer platforms including Zelle.

The post Zelle fraud is rising. And banks aren’t coming to the rescue appeared first on The Atlanta Voice.

The post Zelle Fraud Is Rising. And Banks Aren’t Coming to the Rescue first appeared on BlackPressUSA.

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Here is what you need to know about finding unique white elephant gift ideas that everyone wants to steal

The best white elephant gift ideas are funny enough to get a reaction but useful enough that people actually want to steal them. Look for gifts with a surprise factor, broad appeal, an inside joke, and just enough personality to spark some friendly competition. The wrapping paper comes off, the room goes quiet for half […]

Published

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The best white elephant gift ideas are funny enough to get a reaction but useful enough that people actually want to steal them. Look for gifts with a surprise factor, broad appeal, an inside joke, and just enough personality to spark some friendly competition.

The wrapping paper comes off, the room goes quiet for half a second, and suddenly everyone wants the same gift. That is the sweet spot. A great white elephant pick should make people laugh, lean in, and start plotting their next steal before the turn is even over.

Should a White Elephant Gift Be Funny or Useful?

A white elephant gift can be funny or useful, but the strongest choices usually give people a reason to laugh and a reason to keep the item. A practical gift with an odd design, unexpected feature, or playful theme can get a reaction without becoming something the recipient immediately wants to give away.

The right balance depends on the group. Close friends and family members may enjoy a ridiculous gag gift because they already understand one another’s sense of humor.

A workplace exchange, neighborhood party, or mixed-age gathering usually calls for something with broader appeal. In those settings, humor works better when it is built into an item people could still use afterward.

It also helps to think about how quickly the gift will make sense once it is opened. A strangely shaped kitchen tool, oversized mug, quirky desk accessory, or unexpectedly fancy everyday item can create an immediate reaction. Guests understand the joke right away, while the item still has enough practical value to attract a steal.

Pure gag gifts can be harder to pull off. Something that exists only for the punchline may get a big laugh during the reveal and then sit untouched for the rest of the game. If the goal is to bring one of the gifts everyone keeps fighting over, usefulness gives the joke staying power.

Memorable Present Ideas: Creating Inside Joke Gifts

Inside joke gifts can make a white elephant exchange feel much more personal, especially when most of the group shares the same stories. The trick is choosing a reference that people will recognize quickly instead of building the entire joke around something only two guests understand.

You can turn a memorable vacation mishap, office catchphrase, family story, or long-running group joke into the theme of the gift. A personalized comic book can work especially well when it turns familiar people or a ridiculous shared moment into part of the story.

Think carefully about who the joke involves before ordering anything permanent. The gift should make the person feel included in the fun, not singled out for the wrong reason.

Can You Bring Something You Already Own?

Holiday gift exchanges can be a good place to re-gift something you never used, especially if it is unopened and clean.

The following can all work if they still look presentable:

A duplicate kitchen gadget
An untouched game
A decorative item
A sealed gift set
An unopened candle
A new travel accessory

The goal is to give the item a second chance, not use the exchange as an excuse to clear out damaged or unwanted clutter.

Take a close look at the packaging before wrapping it. Faded boxes, missing pieces, visible wear, or anything that looks obviously used can make the gift feel careless.

Wrapping Budget-Friendly Gifts

Wrapping can make gifts more entertaining before anyone even knows what’s inside.

Misdirection works especially well for fun party games. Put a small gift inside a much larger box. Use packaging from an unrelated household item.

Add harmless weight so guests cannot guess what they are holding. The reveal becomes part of the joke without changing the gift itself.

You can also lean into the theme of the exchange. Bright paper, oversized bows, reusable bags, or deliberately over-the-top wrapping can make an ordinary item feel more memorable. If the gift itself is already funny, simple wrapping may work better so the surprise stays hidden until the last second.

Frequently Asked Questions

Is Picking Last an Advantage in White Elephant?

Picking last can be an advantage because you get to see almost every gift before making your move. Instead of choosing blindly from the remaining wrapped presents, you can steal something that has already caught your attention if the rules still allow it.

That advantage depends on the house rules. Some games limit how many times a gift can be stolen.

Others lock an item once it reaches a certain number of steals. If the most popular gifts are already unavailable, the final player may have fewer strong options than expected.

The first player can also get another turn at the end in some versions of the game. That rule can balance things out, since the person who started with the least information may get one final chance to steal.

How Do You Plan White Elephant for a Large Group?

For a large white elephant exchange, set a firm spending limit and establish the stealing rules in advance.

Create a clear turn order before the game begins. Drawing numbers as guests arrive can save time once everyone is ready to start.

Keep the number of steals per gift limited so the game does not drag on. It also helps to have one person track which creative holiday presents have been stolen and when they are locked, especially if dozens of people are participating.

Can You Play White Elephant Virtually?

A virtual white elephant exchange can work over a video call, with one person keeping track of the turn order and each steal. Guests can either mail physical gifts ahead of time or use digital gifts that can be delivered once the game ends.

Set the spending limit and stealing rules before everyone joins. It also helps to decide how gifts will be revealed and who is responsible for sending each one afterward so the exchange does not become confusing.