Everything is susceptible to fraud of some sort; it's just more of a pain in the butt when it happens to your checking or savings account. Banks seem to be happy not to have to pay the per item click to Visa or MasterCard for the transaction. I will keep an eye out for any data about the prevalence of Zelle fraud. I am curious to see how it compares to fraud on debit cards/credit cards.CrimsonNBlue wrote: ↑Thu Jan 19, 2023 4:52 pmThanks, I didn't realize Zelle was just an ACH transaction. Thought it was just another 3rd party like Paypal.twocoach wrote: ↑Thu Jan 19, 2023 4:36 pmZelle is an ACH transaction, the same as if you wired money only it doesn't take multiple days to process end to end like a wire transaction. It rides the established ACH system but is quicker and involves less fees (for both the account holder and the bank) end to end and can be set up by your bank as it ties directly to your bank account, which is good until a fraudster gets hold of it. Unfortunately, fraudsters are taking advantage of Zelle's ties directly to a DDA account as well as the quick turnaround and starting to run major amounts of fraud through it.CrimsonNBlue wrote: ↑Thu Jan 19, 2023 4:14 pm
Why do banks (seem to) prefer Zelle over PayPal/Venmo?
I prefer to use Paypal and only ever tie my PayPal to a credit card. Your DDA is your real money; if a fraudster gets into that it is a real pain in the ass because you are out that money until you get it all sorted out. A credit card is just fake money; a high tech IOU system basically. You aren't out that money if a fraudster dings you and it is much easier to get that situation rectified.
But some people require the "I need that money right now" of Zelle. Faster and more convenient is great when there are no problems but it comes at a higher risk of impactful fraud.
I guess it makes sense for banks to advertise it and prefer it if it saves on fees, but perhaps they're breaking even if it's susceptible to fraud?
Here's a quick article I found: https://arstechnica.com/tech-policy/202 ... d-refunds/
That article includes this little nugget that helps explain why the big banks like Zelle. JPMorgan Chase, Wells Fargo, US Bank, PNC, Capital One, Bank of America, and Truist joined together to form the company that created Zelle.
"When seven of the biggest banks in America saw that their customers liked using apps to send instant peer-to-peer payments, they rolled out Zelle through a jointly owned company called Early Warning Services in 2017 and quickly began processing billions in payments annually."
