The news: The seven banks that own Zelle-operator Early Warning Services—which include JPMorgan and Bank of America—are reportedly in advanced discussions of a plan that would reimburse Zelle fraud victims, people familiar with the matter told the Wall Street Journal.
Here’s how the plan would work: Banks would determine if their customer’s fraud claim was legitimate. If it is, the bank that holds the deposit account where the funds were sent will return the money to the victim’s bank. That bank will then issue a refund to the victim. Banks in the Zelle network would have to agree to the new rules—which are expected to go into effect in 2023—or risk being removed, the Journal’s sources said.
How we got here: In the last few months, Early Warning Services has faced growing pressure to improve its response to customer fraud claims.
What this means for Zelle: The rule would boost customers’ trust in Zelle, which might’ve been shaken by recent negative press surrounding fraud on the platform. Zelle’s bank relationships have helped turn trust into one of its biggest assets—which makes maintaining it extremely important.
The bigger picture: Fraud is an industrywide issue in the P2P payment space. As an industry leader, Zelle’s potential plans might push other P2P providers to implement stronger fraud prevention and reimbursement measures to stay competitive.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
One Liberty Plaza9th FloorNew York, NY 100061-800-405-0844