Authorities Are Investigating Zelle Complaint Handling

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Wells Fargo said Thursday (May 2) that U.S. authorities are investigating the handling of complaints about Zelle.

This disclosure in a filing with the Securities and Exchange Commission (SEC) follows a similar statement by J.P. Morgan and comes amid scrutiny of Zelle’s peer-to-peer (P2P) payment network by both regulators and legislators, Bloomberg reported Friday (May 3).

In Wells Fargo’s Thursday SEC filing, the bank said: “Government authorities have been conducting formal or informal inquiries or investigations regarding the handling of customer disputes related to fund transfers made through the Zelle Network.”

Similarly, J.P. Morgan said in a February SEC filing that it was responding to government inquiries related to the Zelle Network.

“The firm is responding to inquiries from civil government authorities regarding the handling of disputes related to transfers of funds through the Zelle Network,” the bank said in the filing. “The firm is cooperating with these inquiries and responding to requests for information.”

Reached for comment by PYMNTS, Zelle said that its network rules have always required that fraudulent transaction claims be reimbursed. In accordance with federal regulations, these rules cover cases in which a bad actor initiates a Zelle transaction from a consumers account without authorization.

As of June 30, 2023, our bank and credit union participants must also reimburse consumers for certain qualifying imposter scams, Zelle said in an emailed statement. The change ensures consistency across our network and goes beyond legal and regulatory requirements.

Democratic senators have pressed both Zelle and Venmo, another P2P network, to broaden the circumstances in which users of the networks who fall victim to scams are made whole, according to the Bloomberg report.

Neither Wells Fargo nor J.P. Morgan have been accused of wrongdoing, the report said.

In January, Manhattan District Attorney Alvin Bragg wrote to Zelle, Venmo and Cash App, asking them to institute greater protections against theft.

In a statement provided to PYMNTS at the time, Zelle said: “We are aware of isolated criminal incidents described in the Manhattan District Attorney’s letter. Providing a safe and reliable service to consumers is the top priority of Early Warning Services, the network operator of Zelle, and our 2,100 participating banks and credit unions.”

Zelle said in a March press release that less than one-tenth of 1% of transactions were reported as fraud in 2023, that the percentage has been getting smaller, and that in-app alerts remind users to only send money to people they know and trust.

It also reported that both the number of transactions and the transaction volume of the network increased 28% in 2023, to 2.9 billion and $806 billion, respectively.

“Powered by our unmatched reach through thousands of participating banks and credit unions — and enabled by our continued efforts to enhance security and educate consumers — Zelle soared to new heights in 2023,” Early Warning CEO Cam Fowler said in the release.


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