Customers get a refund after Zelle imposter scam causes loss

Politicians have put pressure on banks to reimburse fraud victims for money they have lost through the peer-to-peer Zelle payment system.

Under pressure from politicians, banks that take part in the peer-to-peer payment service Zelle have started returning money to fraud victims.

The parent company of Zelle, Early Warning Services (EWS), reports that since June 30, over 2,000 financial institutions have begun to reverse transactions made by their clients to con artists posing as government agencies, bank representatives, or other service providers in so-called imposter scams.

The wire service reports that banks have historically resisted calls for them to reimburse victims of these types of scams, arguing that federal regulations only require them to return money that hackers have embezzled from their clients' bank accounts, not payments that their clients were duped into approving.

Ben Chance, chief fraud risk officer at EWS, said that the new policy provides consumer protection services that go considerably beyond current legal and regulatory standards.

How much money EWS expects to repay to clients is not publicly known. Furthermore, the business has not specified a timeframe for reimbursements or given guidelines on how victims of fraud can apply for them. It's yet unknown if banks will go back and undo any fraudulent transactions that happened before the new policy took effect.

To rival PayPal, Venmo, and other payment apps, seven major banks — including Bank of America, JPMorgan Chase, and Wells Fargo — launched Zelle in 2017.