Zelle, the new banking app

[MichaelB]

A few weeks ago I went to deposit some cash in a niece’s BoA account (she lives abroad). The nice people in the branch said no more cash deposits by non-account holders. Instead, I needed to use a new app called Zelle. After my “WTF” response we had a polite conversation, they relented and allowed me a one time exception, as it was a unique and quite urgent situation.

This troubles me. The app literature and documentation is all marketing doublespeak and does not address (that I can find) account safety and security in a comprehensive way. Right now, if someone accesses my bank account and transfers money out, without my authorization, the bank has liability, as long as I report it within 60 days, according to he EFTA.

It is not at all clear that the bank has this same liability if Zelle is used to carry out a transfer. It looks like the core of the system is built around phone numbers and email addresses, instead of bank routing and account numbers. If so, there is all kinds of potential for fraud, and in this case, the banks may not be liable.

I hope I’m reading this wrong, but in the meantime have no intention to install Zelle until I see the same level of security and liability that currently exists.

 

[REattempt]

https://techcrunch.com/2018/02/16/zelle-users-are-finding-out-the-hard-way-theres-no-fraud-protection/

https://www.nytimes.com/2018/04/22/business/zelle-banks-fraud.html

"But the system has had problems. Brian Kemm, a Bank of America customer in Pasadena, Calif., lost $300 because of a misdirected payment.

To transfer money through Zelle, the sender enters the recipient’s phone number or email address. Zelle is built on the assumption that each of those identifiers is unique to one person.

Last November, Mr. Kemm tried to send cash to his mother, Carol Kemm, who is also a Bank of America customer. He typed in the mobile phone number Ms. Kemm had been using for at least three years and hit “send.”

“She told me she didn’t get it, and my first thought was, ‘Mom, you’re not being very tech-savvy,’” Mr. Kemm said. “Eventually, after a few days, I realized it really didn’t get there.”

When he called Bank of America’s customer service line, he learned that the $300 had been transferred — to a JPMorgan Chase bank account, whose owner had registered the same phone number Ms. Kemm used. He said he was told that there was nothing Bank of America could do to get his money back.

Mr. Kemm filed a police report and a fraud claim with Bank of America. On Nov. 30, the bank sent him a reply: “Our records indicate that we initiated the transfer in accordance with your instructions. As a result, your account will not be credited for this claim.”

After being contacted for this article, Bank of America said it would refund Mr. Kemm."

 

[NYEXPAT]

Old school here! My international friends,family and I talk about the transaction on Whatsapp and do the transfers via a Paypal app.

 

[greengo523]

From what I understand Zelle should only be used with family and friends. Where people get in trouble with it is they are using it for Craigslist transactions or transactions with people they don't know, which isn't a good idea.

 

[braumeister]

I was forced to use Zelle a couple of months ago for a small transaction, although I agree with you.

I have a very small (and rarely used) checking account with Chase, just because there is a branch building around the corner and I occasionally need to get something notarized there. That is the only account I allow with Zelle, so even if something goes haywire it won't be a huge problem.

The other one, Venmo, seems to be a much bigger operation, but I have no experience with it.

 

[GrayHare]

Whenever I hear of this app, I can't help but think of Marathon Man in which Laurence Olivier plays the ex-Nazi Zelle. Oh, wait, that was Szell.

 

[Texas Proud]

My old boss does different sports pools where we throw in $25.... he asked people to sign up for this app and send money... I refused...

I did not get into the particulars, but I just did not feel comfortable transferring money this way even if there were some checks in place that if your money went missing you would get it back....


SOOO, I sent him a check from the payment program... if someone does not want to get money from me the old fashion way, then I do not want to do business with them...

 

[Elbata]

I use Zelle all the time and love it. Send money to family and friends. I find it most convenient. There are times I don't have cash at a restaurant and would like to send the server the tip via Zelle, but still many don't know about this tool.

 

[capjak]

I use Venmo works well as long as the ones that you want money from or to are also on the ap

 

[Ian S]

I do use it but only with folks I know. It's part of the Chase website and phone app. I don't see how someone could get access to your account and withdraw money as you have to send the money yourself. Someone can ask for you to send them money but you have to actually go through a process to send it. I could see how there would be a problem if you sent the money to the wrong address but that's something you have to check thoroughly before using Zelle.

 

[Papa bear]

I've got college aged tenants. One of which is a techie hacker type. She told me to stay away from zelle as the underlying code has issues. She recommends PayPal.

Though I have used zelle before with no issues, I still prefer actual cash or a check.

 

[phil1ben]

Have used Zelle to send money to my kids since it came out. No problems at all. My son who lives in New York also sends his rent payment through Zelle to his landlord who is an Amercan living in Japan. Only issue is that his rent is more than the $2,500 daily limit so he must do the transfer over two days through two separate Zelle transactions.

 

[audreyh1]

A few weeks ago I went to deposit some cash in a niece’s BoA account (she lives abroad). The nice people in the branch said no more cash deposits by non-account holders. Instead, I needed to use a new app called Zelle. After my “WTF” response we had a polite conversation, they relented and allowed me a one time exception, as it was a unique and quite urgent situation.

This troubles me. The app literature and documentation is all marketing doublespeak and does not address (that I can find) account safety and security in a comprehensive way. Right now, if someone accesses my bank account and transfers money out, without my authorization, the bank has liability, as long as I report it within 60 days, according to he EFTA.

It is not at all clear that the bank has this same liability if Zelle is used to carry out a transfer. It looks like the core of the system is built around phone numbers and email addresses, instead of bank routing and account numbers. If so, there is all kinds of potential for fraud, and in this case, the banks may not be liable.

I hope I’m reading this wrong, but in the meantime have no intention to install Zelle until I see the same level of security and liability that currently exists.

I have used Zelle, but was not required to go through an app, but used it directly from the Chase website after logging in.

I was highly annoyed to discover that Chase does not allow ACH transfers to another person’s Chase account! You have to go through Zelle, and it has a $2K limit. So I’m forced to write checks again or deal with multiple transfers.

Gosh I hope that B of A doesn’t change that convenient option! They’ve been advertising Zelle lately.

BTW - my brother and I only set it up to work with email addresses, not phone numbers.

 

[ncbill]

OP should be able to do an ACH transfer from their account to their niece's.

 

[brucethebroker]

Whenever I hear of this app, I can't help but think of Marathon Man in which Laurence Olivier plays the ex-Nazi Zelle. Oh, wait, that was Szell.

"Is it safe?"

 

[mokan]

Thanks for this. Wells Fargo forced the switch to Zelle for transfers to other WF customers (my sons). I should have realized they were a popular 3rd party app. I'm sure WF is doing it to eliminate the cost of maintaining an internal feature + offloading the liability if something goes wrong.

 

[MichaelB]

Interesting, there’s more experience here than I expected. So, for the users, does anyone have any insight regarding security? For example, if my laptop or phone is compromised, my bank account accessed and funds transferred unlawfully, the bank is liable, as long as I comply with reporting requirements. Is a transaction routed via Zelle covered by the same regulations, and does the account holder enjoy the same protection?

 

[misanman]

From Wikipedia -

Zelle is a U.S.-based digital payments network owned by Early Warning Services, a private financial services company owned by the banks Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, and Wells Fargo.[1] The Zelle service enables individuals to electronically transfer money from their bank account to another registered user's bank account (within the United States) using a mobile device or the website of a participating banking institution. The Zelle service was launched in 2017.

I should have added that there are a good many banks other than the EWS owners who are adopting Zelle. My bank is Comerica and I just received notification from them that they are switching to Zelle within the next few weeks.

 

[GrayHare]

"Is it safe?"

Seriously, the first time I heard of Zelle I figured it was some sort of bad-taste, perverse joke. Given the geniuses at Wells Fargo, when they come out with a competing service now we have an idea what they'll name it.

 

[mpeirce]

We use Apple Pay Cash to transfer money to our DS in college. There is no fee when the money is moved onto Apple Cash using a debt card (i.e. our checking account). If you choose to add money from a credit card, a 3% fee is added (we don't do this, but it's an option).

There are amount limits: $3K per transaction, $10K total per week.

The security is the best available. The transaction goes over Messages which is end to end encrypted and the transaction isn't sent w/o either biometric verification - either TouchID or FaceID.

https://support.apple.com/en-us/HT207884

 

[dvalley]

I've been using PayPal for the last 2 decades mostly to transfer money to friends and family.

 

[Mdlerth]

Get off my lawn!

This Zelle undertaking sounds like yet another solution to a nonexistent problem. One more piece of limited-use software to automate a task that didn't need automating. One more bit of exposure to hackers and thieves.

Banks have been doing electronic fund transfers for forty years. Now all of a sudden they need to require customers to go through cellular telephone programs to accomplish it? Tsk, tsk.

In thirty years, today's current fascination with cramming millions of needless features into cell phones will be regarded (and rightly so) in hindsight as ludicrous. The grandchildren of grey-haired millenials will ask "What were they thinking?" and laugh.

 

[marko]

A few weeks ago I went to deposit some cash in a niece’s BoA account (she lives abroad). The nice people in the branch said no more cash deposits by non-account holders.

Michael, are you talking depositing 'cash' 'cash'?
Could you have deposited a check?

 

[mpeirce]

Banks have been doing electronic fund transfers for forty years. Now all of a sudden they need to require customers to go through cellular telephone programs to accomplish it? Tsk, tsk.

Use cases vary, but a lot of the use Zelle, Apple Pay Cash, or Venmo (and there a lot of alternatives) seems more to be for replacing small cash transactions than bigger account to account transfers.

Think splitting the check for dinner, a cab or uber ride. To me it seems more a replacement for carrying cash (or coin change!).

Zelle is the banks trying to stay in the game.

 

[MichaelB]

Michael, are you talking depositing 'cash' 'cash'?
Could you have deposited a check?

No checks, cash or anything else. It was Zelle or nothing.

Use cases vary, but a lot of the use Zelle, Apple Pay Cash, or Venmo (and there a lot of alternatives) seems more to be for replacing small cash transactions than bigger account to account transfers.

Think splitting the check for dinner, a cab or uber ride. To me it seems more a replacement for carrying cash (or coin change!).

Zelle is the banks trying to stay in the game.

This makes sense. Banks are not structured to process small transactions between individuals. Payments to businesses are handled via debit or credit card, and replacing this with a low cost app seems a bit cannibalistic, but they do need to stay in the game.

I found the T&C’s for WF (here). Under section 13 it lists provisions similar to the EFTA, so Zelle appears to have the same level of consumer protection as a personal bank account with regard to unauthorized transactions.