What to Know
- Consumer advocates believe scams should be protected under federal Regulation E, which would allow consumers to recover money
- The government agency established to ensure consumers are treated fairly by banks told the I-Team it agrees
- Banks disagree, saying focus should be on catching scammers
Huy Pham recently got a call from what appeared to be his bank, telling him fraudulent charges were hitting his account.
“Of course I’d trust them, because it’s the bank’s phone number,” he said.
The person on the phone convinced Pham that he could protect his money by transferring it to his Zelle account. So he did – $5,000. But fraudsters were waiting and swiped the money. It was all a scam. Huy asked his bank for a refund, but it said no, saying he authorized the transaction.
“I authorized the transaction under false pretenses, because I thought the bank called me,” he said.
Consumer advocates side with victims
This is where the debate begins. Consumer advocates believe these Zelle transactions should fall under Regulation E, which protects people from fraudulent transfers from their bank account. They say that even though consumers authorize the transactions, they were fraudulently lured into doing so.
“Our view is that when a consumer is scammed or frauded into sending money, even though they may hit the send button on Zelle, that should be protected,” said Rachel Gittleman with the Consumer Federation of America.
In fact, the Consumer Financial Protection Bureau (CFPB), the government agency established to ensure customers are treated fairly by banks, told the I-Team it agrees. Zelle, in fact, is owned by some of the country’s largest banks. But the CFPB hasn’t cracked down on banks. Consumer Federation thinks it should. It’s also pushing Congress to amend Regulation E to explicitly offer protection from Zelle scams. But it’s also pointing the finger at banks, asking them to voluntarily abide by Regulation E.
“When someone hacks into your bank account, there are tons of different mechanisms to protect you. I view the Zelle piece as just an extension of that protection,” said Gittleman.
Banks hold consumers responsible
But banks don’t see it that way. The American Banking Association, a banking trade group, told the I-Team: “Customers are responsible for transactions they initiate or authorize, even if they are induced by fraud…” It said regulators should go after the scammers, instead of focusing on liability after a scam takes place.
But one thing few can dispute: if something doesn’t change, consumers will continue to lose even more money.
As for Huy, the I-Team reached out to his bank and it refunded his money.
Tips to avoid getting scammed:
- If you get a call from what appears to be your bank, hang up and call them back using the number on the back of your debit card.
- Never send money through Zelle to someone you don’t know.
- If someone tells you the matter is urgent, that’s a red flag. Scammers use this tactic to get you to act quickly.
- If you’ve been scammed, report it to the Consumer Financial Protection Bureau. That’s the best way for the government to understand just how big the problem is.
Source: NBC Los Angeles