It is the intentional decision of zelle to be like using cash in terms of rollback guarantees. This is so that payees can accept it like cash. There's no way to balance the scales -- the payment system that can be rolled back has its own issues.
That decision is as exactly as legally binding as the signs on trucks disavowing liability for falling debris.
Banks might be trying to pretend Zelle isn't covered by Regulation E, but I haven't heard any good argument for why it doesn't apply, other than arguments similar to yours that they simply don't want it to.
Banks are not arguing that Zelle isn't covered by Regulation E.
Regulation E talks about liability for "unauthorized transactions". Those are transfers "from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer".
If you initiated the transfer but were misled into doing so or provided the wrong payment information or whatever, it's still an authorized transaction from Regulation E's perspective; so you are still liable for it. The only exception is if you were induced by force to initiate the transfer.
People are welcome to challenge the banks in court. It will be no skin off my back if they win. But I guess the banks have good reason that believe that they can defend their practices successfully. If not it will be the end of Venmo, cash app, and zelle -- or at least the free transfer features of those apps.
We have other payment systems like credit cards which work that way. The inevitable consequences are that permissions to receive payments are tightly locked down, and the network charges fees to help cover the cost of fraudulent transactions.
brigade|3 years ago
Banks might be trying to pretend Zelle isn't covered by Regulation E, but I haven't heard any good argument for why it doesn't apply, other than arguments similar to yours that they simply don't want it to.
NovemberWhiskey|3 years ago
Regulation E talks about liability for "unauthorized transactions". Those are transfers "from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer".
If you initiated the transfer but were misled into doing so or provided the wrong payment information or whatever, it's still an authorized transaction from Regulation E's perspective; so you are still liable for it. The only exception is if you were induced by force to initiate the transfer.
asdfasgasdgasdg|3 years ago
criddell|3 years ago
SpicyLemonZest|3 years ago