A US Senate investigation is shedding light on just how often America’s big banks refuse to reimburse victims of fraud.
The Permanent Subcommittee on Investigations says JPMorgan Chase, Wells Fargo and Bank of America collectively refused to reimburse $880 million in Zelle transactions that customers reported as fraud between 2021 and 2023.
Specifically, the banks refused to reimburse $320 million to customers who were hit by unauthorized transactions – and rejected an additional $560 million in reimbursement to customers who were tricked into authorizing an illicit transaction.
The new numbers are the centerpiece of the subcommittee’s report on Zelle’s practices, entitled “A Fast and Easy Way To Lose Money: Insufficient Consumer Protection on the Zelle Network.”
The report says the percentage of consumers reimbursed for disputed Zelle transactions at the three major banks has plummeted from 62% in 2019 to 38% in 2023.
It also raises concerns about potential age bias and vulnerabilities, finding customers under 35 years-old were reimbursed at lower rates than older consumers across Zelle.
Democratic Senator Richard Blumenthal, who Chairs the Permanent Subcommittee on Investigations, says he’s pushing to close legislative loopholes to ensure people are reimbursed when they mistakenly send funds to scammers.
“[The banks] will say that often it is the fraudsters and the con artists who trick consumers into transferring money.
No question that consumers should be on alert, but that is no excuse for the repeated, relentless failure of the banks and Zelle to reimburse when they should be doing better to protect the consumers.”
At a Senate hearing on the issue this week, executives from JPMorgan Chase, Wells Fargo and Bank of America defended their efforts to protect customers, pointing to collaborative efforts with law enforcement and consumer protection organizations.
Cameron Fowler, the CEO of Zelle’s parent company Early Warning, which is owned by seven major US banks including Chase, BofA and Wells Fargo, also testified.
Fowler said he believes returning more money to victims of fraud is not the answer.
“We need to get focused on the criminals who are perpetrating this. Whole of society, across industry, across government solutions are an important next step…
Increasing reimbursements won’t solve this problem. We already lead the industry in reimbursements.”
Fowler said more than 99.9% of Zelle transactions are completed without any report of fraud, and points to the upcoming launch of a national fraud prevention taskforce as an example of the company’s ongoing efforts to support consumers.
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