A high instance of Zelle transaction scams originating from social media contacts has caused JPMorgan Chase Bank to block payments made through social media networks and messaging apps.
The bank has stated that Zelle was intended as a method of transferring money to family, friends, and trusted contacts, and should not be used to make online purchases. In this case, scammers have been able to take advantage of the relatively unregulated nature of these apps, with users initially having little recourse if they fell victim to fraudsters.
Zelle has been called out by the US Consumer Financial Protection Bureau (CFPB) given its very limited safeguards. These vulnerabilities saw hundreds of thousands of users being scammed out of a collective $870M over a period of time. For its part, Zelle initially shrugged at the accusation and stated that it was the customer’s responsibility to ensure they were paying the right person and that the banks behind the app were not responsible. For its part, the CFPM initiated a lawsuit against Zelle’s operator and its owner banks, complete with threats of legislation, leading to a limited change of policy late last year.
The 2,100 financial firms on Zelle, a peer-to-peer network owned by seven banks including JPMorgan Chase and Bank of America, began reversing transfers as of June 30 for customers duped into sending money to scammers claiming to be from a government agency, bank or existing service provider, said Early Warning Services (EWS), the banks’ company that owns Zelle.
Given the new criteria, users will be reimbursed if the scammer pretends to be a government agency or bank. The change also suggests that if the scammer pretends to be a company, you’ll only get your money back if you are an existing customer of that company. Finally, it appears you’ll be out of luck if the scammer poses as an individual, such as a family member or friend.
The BleepingComputer website noticed these changes in Chase’s terms and conditions for Zelle payments, which will take effect in March:
“For your protection, Chase will not allow you to send Zelle payments identified as originating from contact through social media. We’ll decline those transactions because Zelle is meant to pay friends, family and other trusted recipients you know, not for others you meet on social media,” the bank warned. We may request information from you (for example, when you set up a payment or add a recipient) regarding your purpose of payment, the method of contact with your recipient, or other details we deem appropriate to assess whether your payment has elevated fraud or scam risk, or is an illegal, ineligible or improper payment.”
Chase won’t always be able to identify social media sales but will block them where it can.
Stay tuned for additional details as they become available.
Via 9to5Mac and BleepingComputer