Wells Fargo, Zelle slammed by Liz Warren over rampant online banking fraud Wells Fargo customers who use Zelle to send and request payments suffer more than twice the rate of fraud and other online scams as people using other big banks, according to US Senator Elizabeth Warren (D-MA). Warren chastised both financial firms in letters to their CEOs this week: she said Wells Fargo had sent her an " …
Something about foxes and chicken houses.
Major banks in the US teaming up to create a payment alternative to paypal (also a fox) and avoid scrutiny while chowing down on the chickens (clients).
Yum, yum. Capitalism at its best!
I think the banks were trying to do a good job on a competing product to PayPay, but underestimated criminal potential.
secure transactions will ALWAYS plague the banking industry, just like bank robbers always have.
As for Lizzy Warren I would not trust her with respect to 'fraud' considering the FRAUD she committed when trying to leverage affirmative action (something I already hate but still) by claiming to be "Native American" with respect to college admission etc.. Me being 1/8 or so (about 1/16 of which is from the Taos tribe in New Mexico), I could have made stupid claims like that and it might have even been LEGIT, but the thought of doing so NAUSEATES me... And also, Warren's DNA test showed her at under 0.1% (as I recall), so in REALITY she's out there playing "Ms. Pot" to the banking industry's "Mr. Kettle" when it comes to FRAUD.
(I do business with Wells Fargo, and I haven't had any problems)
Which is exactly her point, so I find it interesting to see them shoot themselves in the foot like that.
Back when I had a Chase account, i was absolutely hammered to get a Zelle account, like Amazon hammers you about Prime.
I'm glad that not only did I not do that, but I also finally closed my Chase account.
Even afterwards, Chase still emailed me constantly, with a "Log into your account to control your email preferences" which was difficult as I didn't have an account. Calling their support got a brick wall after they discovered I wasn't a customer.
I filed an FTC spam complaint, and Chase called me and tried to call me a liar. That was fun because I just had to open my folder and list the dates they'd sent me an email. They then said it wasn't sent by Chase, and I was like "marketing@chase.com" isn't Chase?
They told the FTC that they'd called me and the matter was "amicably resolved and the case is closed" which I disputed with an account of the call.
The FTC finally said "any more emails WILL result in a heavy financial penalty" and it stopped.
That's the sort of business they run.
welll... did you check the e-mail headers to see what mail server sent the spam? sorry, but I have to agree with chase on this one, if in fact someone merely crammed their e-mail address into the 'From' on the mail header, and the 'reply to'' would have been their scammer address...
I sometimes get spam like this, even spam that pretends to be from Wells Fargo, or rarely, Chase, More often it claims to be from my own mail server admin (which I run for my domain) which is laughable but still sad. (If I am in a rotten mood I report it to all of the appropriate agencies and ISPs). Clicking the 'remove me' link just confirms your e-mail address is real so you can get even MORE spam.
In any case I do business with Chase also and have not seen problems, though the spamming in their name (i.e. joe job) DOES happen.
This. I mean, really. Wells Fargo just ponied up *another* fine for their lax anti-money laundering systems, plus they are still dealing with the fallout of the fake account scheme.
How many times does a potential customer have to see "bad business practices" before they bail on the company??!
1. People have short attention spans
2. All publicity is good publicity.
If a name or brand is in the news, people quickly forget why, but still remember the name.
Here in the UK, a major ISP, Talk Talk, got hacked TWICE, losing large amount of customer information, and people are STILL signing up to them.
On another note, I see Chase Bank are coming to the UK.
I don't understand how BoA, Wells Fargo, and Chase keep existing. They take away your money and tell you it's your fault for being such a crappy customer, then demand you sign up for more because they're trying to help. You lend them $50000 and you're still deep into a negative annual yield.
There are so many credit unions and small banks that are a pleasure to do business with.
Really. For retail banking in the US, if people can find a local small bank (good) or credit union (better) that meets their needs, that is such a better choice than a big bank.
Retail banking is a thin-margin business, and big banks are only in it for the opportunity to upsell. Small local banks actually have a financial reason to care about their individual (and small-business) depositors, and credit unions are owned by them.
Wells Fargo customers who use Zelle to send and request payments suffer more than twice the rate of fraud and other online scams as people using other big banks ...
Why would the banks suffer different levels of Zelle fraud?
IF - it is because the Wells Fargo network is being used to enable the fraud that needs to solved immediately. However, there are no definite indications so far that is it (keep looking though).
Most Zelle fraud reports are of scams, although some reports are just of a mysterious transfers with no explanation.
The banks sometimes?/often?/usually? deny fraud coverage stating that there is no proof of fraud. Some victims take it to court. A tiny fraction of victims with respectable faces have their case taken up by the media.
It's almost certain that the banks count as actual fraud ONLY the cases that they make payouts for. (Because if the bank counts it as fraud, but doesn't make the payout, the bank is committing a crime by Regulation E of the Electronic Fund Transfer Act).
It is just possible that Wells Fargo is making a higher rate of payouts than other banks simply due the memory of what happened in 2016 after the Wells Fargo customer-cheating expose the led to then Wells Fargo CEO John Stumpf resigning, and having his Golden Parachute reduced from $200 million to $130 million. It's amazing what can bring out the "nice" in people.
Anyway, how the banks are counting fraud needs to be clarified. We need to know both how many fraud claims are made by customers, and how many are acknowledged by the banks. The banks should be required to have ready to report in detail all claims, even if they don't acknowledge them as fraud.
Zelle doesn't charge any fees, unlike credit cards which have an average of about ~2%, some which goes towards covering fraud. But if Zelle's security is no better than a credit card, then perhaps Zelle just doesn't have a feasible business model, unless the current scammy mess is counted as feasible.
So how does Zelle make their money? I would guess by selling the transactions details as marketable PI. (That would be pretty interesting information for fraudsters, wouldn't it?)
No mystery here. On its website, Zelle clearly distinguishes between Scam and Fraud. Scam is when the customer authorizes the payment. Fraud is when the customer does not authorize the payment. It goes on to say that it will not reimburse Scam victims and will reimburse Fraud victims. AFAIK, Reg E obligation extends only to Fraud, not Scam.
so, if my funds are transferred without my permission it is THEIR fault, so they re-imburse me. That is fair.
But if I authorize the transfer it is MY fault? That is unfortunately NOT a 'wrong' position to take.
In the USA a credit transaction can be reversed within a reasonable time period (60 days I think it is). A debit or EFT (as I understand it) can NOT be reversed. So when I do online orders it is always with credit, not debit or EFT [except in a very few cases, like paying taxes or doing business with extremely trustworthy vendors].
Anyway part of the problem may lie on a lack of understanding by the users. We hate the outcome, but that's how it is.
Interestingly, Chase just started classifying Zelle (and Venmo) transfers as cash advances on their credit cards. They gave zero notice of this change in policy but are issuing refunds (once) to people that complain about it.
It's easy to have bank accounts at credit unions. However, the big banks really do have better credit cards (at least in my experience).
Another place it is nearly impossible to actually choose the bank (in the US at least) is mortgages. A huge proportion of mortgages are sold soon after being issued (and you have no control over who they are sold to).
"It's easy to have bank accounts at credit unions. However, the big banks really do have better credit cards (at least in my experience)."
YMMV. I've had both, and my experience has been that credit union cards are better: lower APR, better fraud detection, better customer service, better online tools, and more generous cashback or other rewards. Which is not to deny that other people will have other experiences at other banks and credit unions. So shop around.
That's been my experience too. Credit cards, like all the other retail-banking products and services I've used, have been better at credit unions and small banks than at big banks.
Of course a lot will depend on the individual institution. The credit union I used for the longest period of time was one of the biggest in the US, so they had a lot of resources and leverage. The small bank we're using now (after moving) has been a fixture of the community for a long time and a healthy balance sheet, so again it has decent resources.
Citi recently also classified Venmo as cash advance. My two Venmo transactions were both to pay for yard mowing (selling old house having already moved the mowers to the new one), to the same person, for similar amounts. First transaction was fine. Second one was listed as cash advance with $10 fee. Customer service didn't want to hear it; "all Venmo transactions are cash advances". It took disputing the charge before they finally (2 months later!) skipped the $10 fee.
It wasn't until I read the above comment that I finally understood why the transactions were handled differently - they never did tell me!
It's the banks fault people are being stupid and sending money to unverified accounts?
Back under your bridge Pocahontas.
Try using a credit card instead dummy's. That way if the deal goes south, one can dispute the deal and get ones cash back.
If the vendor won't take a credit card, WALK!
CCs don't always offer a clawback option either - some of it depends on the country you're in and which bank you use. Some just do a quick check and immediately refund you, others see that as too much work and put a boatload of automated process in the way to make you give up.
Earlier in the year I used a currency convertor firm called "Wise" to pay a friend some money into his account because bank FX charges are a solid ripoff. It wasn't a large amount so it never getting there wasn't a big problem, but I reported them to the local police - the fun part about an electronic transaction is that it's easy to preserve evidence of the whole process. Now for the fun part: I just got a letter from the court that they've started a formal investigation.
It appears that trying to steal that small amount of money may have started a rather large problem for them.
I have zero pity for any financial organisation mishandling money: there are rules, and there is a trust issue. Nobody ever went to jail for the CDO packaging of bad mortgages a while back, but we all had to chip in to rescue the system from collapsing on itself. Yet, they still inexplicably all got bonuses and I have never seen a return of that rescue money, so as far as I'm concerned the industry has lost any right to clemency.
99.9 percent of the transactions on its network are sent without fraud or scam reports
So on average one out of thousand transactions on their network results in a report for fraud or scam and they think this is good (enough)?
How many transactions do they have on their network on a typical business day?
I was thinking the same thing - all the statements in the article could be true, depending on the overall volume of transactions and a couple of other numbers they won't reveal.
99.9% clean, wow that's pretty good! But isn't the point to get everybody to use your product, and take over the world (so to speak)? When you scale way, way up, is three 9s something to boast about?
If you made planes, and they only crashed 0.1% of the time, would >you< fly on your own product?
The US banking sector needs to get it's head out of it's ass, shape up, start operating in this century and take a clue from the rest of te world. From everything I've seen the entire US banking sector is living in the 1980s or there about (or maybe even earlier) with shit systems, lacks security, massive and opaque fees, everything relying on credit cards (going back to shit systems, lacks security, etc) and a "screw you" attitude. Most of the rest of the world has moved on to interoperable online banking systems that allow near real-time bank transfers, even with methods of verifying the other account or simply setting up the system so that fraudulent transfers are much harder to do. It's really not hard, the systems and expertise are out there. It just seems the US doesn't want to adopt any of it?
Man, Wells Fargo get crap when they commit fraud themselves, and they get crap when they outsource it. Come on, people! What are they supposed to do?
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