A US Senate investigation is shedding light on how often America's big banks refuse to reimburse fraud victims.
The Permanent Subcommittee on Investigations said JPMorgan Chase, Wells Fargo and Bank of America collectively refused to refund $863 million in Zelle transactions that customers reported as fraudulent between 2021 and 2023.
Specifically, the banks refused to refund $303 million to customers harmed by unauthorized transactions, and also rejected a request to refund another $560 million to customers who were deceived into authorizing an illegal transaction.
The new numbers were the centerpiece of the subcommittee's report on Zelle's activities, entitled "A Quick and Easy Way to Lose Money: Inadequate Consumer Protection on the Zelle Network."
The percentage of consumers who received refunds for disputed Zelle transactions at the three largest banks plummeted from 62% in 2019 to 38% in 2023, the report found.
This also raises concerns about potential age-related bias and vulnerability, as customers under 35 years of age were reimbursed at lower rates than older consumers in Celle.
Democratic Sen. Richard Blumenthal, who chairs the Permanent Subcommittee on Investigations, said he is committed to closing legislative loopholes to ensure refunds are given to people who mistakenly send funds to scammers.
“[Banks] will say that it is often scammers and swindlers who deceive consumers into transferring money.
There is no doubt that consumers need to be on guard, but that is no excuse for the banks and Zelle's repeated and persistent failure to provide refunds when they should be doing a better job of protecting consumers."
At a Senate hearing on the issue last week, executives from JPMorgan Chase, Wells Fargo and Bank of America defended their efforts to protect customers, pointing to joint efforts with law enforcement and consumer protection organizations.
Also testifying was Cameron Fowler, CEO of Zelle Early Warning's parent company, which is 73% owned by the three big banks in question.
Fowler said he doesn't think returning more money to fraud victims is the answer.
“We need to focus on the criminals who are doing this. The decisions of the entire society, the entire industry, the entire government is an important next step...
Increasing reimbursements will not solve this problem. We already lead the industry in reimbursements.”
Fowler said more than 99.9% of Zelle transactions are completed without any fraud being reported, and pointed to the upcoming creation of a national fraud prevention task force as an example of the company's ongoing efforts to support consumers.
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