Credit cards and digital payment apps such as PayPal offer some distinct advantages over cash, including the ability to recover money paid to scammers.
But Zelle, a digital payment network owned by seven major banks, isn’t so protective of its users.
If you use Zelle to pay someone who proves to be a con artist, you have only a slim chance of recovering the money from your bank. The same is true if you send money to the wrong person. If you hit send, the money is probably gone — just as if you’d lost a $20 bill on the street.
On its page for reporting scams, Zelle says: “While we are unable to assist with getting your money back, it is important to us that users have the ability to report this experience. We will report the information you provide to the recipient’s bank or credit union to help prevent anyone else from having the same experience.”
Some critics argue Zelle and its banking partners are misinterpreting the federal Electronic Fund Transfer Act of 1978 and the regulation implementing it, which shield consumers from much of the liability for “unauthorized” transfers. Under the law, an unauthorized transfer is when someone else initiates a transfer from your account without your approval.
According to Zelle and its partners, if you knowingly send cash to someone who’s taking your money under false pretenses, that’s an…
