CHICAGO (CBS) – No more need for cash or checks, the latest way to spend and send money is with a smartphone. But one of the most popular ways to do it is also seeing some complaints.
“How should I pay you back? I told you dude just pay me with Zelle,” the commercial says.
With 100,000 people signing up every day, Zelle is one of the fastest growing digital wallets on the market.
“It’s probably in your bank app. It’s fast as well,” Zelle advertises.
It’s also controversial.
CBS asked Pamela, a Zelle user, what she thinks about it.
“I think it’s quick. I think it’s easy. But I don’t think it’s safe,” she says.
But “safe” is something Zelle stresses. It’s owned by seven banks and partners with dozens more.
“It’s backed by the bank so you know it’s secure,” Zelle advertises.
Pamela tried to pay a workman $1,150 using Zelle through her Chase app, but she entered the wrong information and the money went to a stranger.
“There were two digits that accidentally got switched on the phone number,” says Pamela.
She assumed Chase or Zelle would clear up the confusion. But, she says, “They simply denied our claims, every single time.”
Jake Kessel got a similar letter from Bank of America after a problem trying to pay his landlord, $725.
“My money went to some random person instead of the intended recipient,” Kessel says.
In this case, Kessel did nothing wrong.
“He sent it to the correct phone number, but that phone number has not been mine forever,” says Tari Mitcheff, Kessel’s landlord.
Through people who still text him, CBS got the name of the guy who used to own the phone and learned he might work at a church.
So, CBS went looking for him, but couldn’t find him. Kessel and Mitcheff believe the bank knows exactly where the money is, in a Chase account linked to the phone’s previous owner.
Mitcheff says, “Whoever created the application failed to put safeguards in place for this exact thing. They should have said, this phone number, it’s registered to so and so, is this who you want the money going to?”
But that’s not the way it works. According to the terms and conditions spelled out in capital letters by Bank of America:
“YOU AGREE THAT YOU, NOT WE OR ZELLE, ARE RESPONSIBLE FOR RESOLVING ANY PAYMENT OR OTHER DISPUTES THAT YOU HAVE.”
Lamont Black, Ph.D, an Associate Professor of Finance at DePaul University says, “My hope is that as Zelle develops, and some of these issues come out more publicly that that will create more pressure on them to fix those problems.”
After CBS contacted both banks, Kessel got his money back.
“It was just like a sigh of relief. Definitely contacting CBS pushed them over the edge to do the right thing,” says Kessel.
In Pamela’s case it was user error. She tracked down the person she accidentally paid and the woman was kind enough to return her money.
Zelle couldn’t discuss the specific cases, but did say, “We are always listening to consumer feedback, and will continue to enhance our service processes, and educational efforts to improve consumer experiences.”
Full Zelle response:
“Zelle is an easy, fast, and safe service for sending money electronically to people you know and trust. It is available through the mobile banking applications of several U.S. financial institutions. Early Warning (the network operator behind Zelle) and its financial institution partners protect consumers from unauthorized activity on their accounts including rules and regulations governing electronic payments, such as Reg E. Consumers are not liable for unauthorized transfers. We recommend that consumers always check they have the appropriate mobile phone number, or email, before hitting send, since most transfers happen instantly. For payments sent in error to the wrong recipient, we offer defined processes for consumers to engage with their financial institution or Early Warning for assistance. We are always listening to consumer feedback, and will continue to enhance our service processes, and educational efforts to improve consumer experiences.” – Early Warning Services, the network operator behind Zelle