Zelle, which facilitates money transfers between individuals, is owned and operated by seven large banks and used by customers of some 1,500 participant banks and credit unions. The complaint for this class action alleges that these participant institutions, like Capital One, NA, the defendant in this case, market Zelle as “as fast, safe and secure way for consumers to send money.” But the complaint claims this is not true, because Zelle has no consumer protections against fraud.
The Nationwide Class for this action is all persons with a Capital One account who signed up for the Zelle service and incurred unreimbursed losses due to fraud. A New York Class has also been defined, for all New York persons with a Capital One account who signed up for the Zelle service and incurred unreimbursed losses due to fraud.
Capital One, the complaint alleges, “encourages its accountholders to sign up for the Zelle service[,]” but does not provide a deposit agreement or terms of service at that time.
The bank promises that Zelle is a “fast, safe and easy way to send and receive money[,]” the complaint alleges, and also suggests, “Move money in the moment. Simply and securely…” and “With Zelle, money payments and requests are simple, safe—and free—using the Capital One Mobile app[.]”
Zelle has become “by far the country’s most widely used money transfer service[,]” the complaint says, but it alleges that Zelle also has a problem with fraud: “If a fraudster removes money from a Zelle user’s bank account, either directly or by fooling the Zelle user to transfer money, those funds are unrecoverable to the consumer.”
The complaint reviews ways in which fraudsters cheat Zelle users and steal their money, for example, by stealing a phone and making Zelle transfers from the account of the phone’s owner. “In short, and unbeknownst to average Zelle users,” the complaint alleges, “the Zelle network has become a preferred tool for fraudsters like romance scammers, cryptocurrency con artists and those who use social media sites to advertise fake concert tickets and purebred puppies.”
However, the complaint alleges that these kinds of fraudulent transfers will almost never be reimbursed by Capital One, even if they inform the bank promptly.
But the complaint claims that, under the Electronic Funds Transfer Act (EFTA), banks must reimburse customers for losses on fraudulent transfers. The complaint quotes a FAQ at the Consumer Financial Protection Bureau (CFPB) as saying that banks must reimburse transactions that were “initiated by a person other than the consumer without actual authority to initiate the transfer.”
The complaint claims, “Recent CFPB guidance on unauthorized electronic fund transfers indicates person-to-person payments are electronic fund transfers, such as transactions made with Zelle, and trigger ‘error resolution obligations’ to consumers to protect them from situations where they are fraudulently induced to initiate an unauthorized electronic transfer from a third party.”
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
Capital One No Reimbursement for Zelle Fraud Complaint
August 4, 2022
Zelle, which facilitates money transfers between individuals, is owned and operated by seven large banks and used by customers of some 1,500 participant banks and credit unions. The complaint for this class action alleges that these participant institutions, like Capital One, NA, the defendant in this case, market Zelle as “as fast, safe and secure way for consumers to send money.” But the complaint claims this is not true, because Zelle has no consumer protections against fraud.
Capital One No Reimbursement for Zelle Fraud ComplaintCase Event History
Capital One No Reimbursement for Zelle Fraud Complaint
August 4, 2022
Zelle, which facilitates money transfers between individuals, is owned and operated by seven large banks and used by customers of some 1,500 participant banks and credit unions. The complaint for this class action alleges that these participant institutions, like Capital One, NA, the defendant in this case, market Zelle as “as fast, safe and secure way for consumers to send money.” But the complaint claims this is not true, because Zelle has no consumer protections against fraud.
Capital One No Reimbursement for Zelle Fraud Complaint