JPMorgan Chase, Bank of America and Wells Fargo are among six US banks that have not defined what an unauthorized transaction is, despite the term’s critical role in determining whether fraud victims will be reimbursed, according to a new report.
The three big banks, along with Capital One, U.S. Bank and Truist, have released no policies explaining what qualifies a transaction as authorized, says Consumer Reports.
According to the Electronic Funds Transfer Act, once a customer authorizes a transfer – even while being scammed – businesses are typically not liable for resulting losses unless certain conditions are met.
US banks routinely deny fraud claims based on this framework, but Consumer Reports says the banks in question and the bank-owned instant payments platform Zelle have no official public policy or explanation on the matter.
“At a minimum, we believe that the companies have a responsibility to transparently inform consumers of the risks of using their products, one of which is falling victim to a scam and not being able to recover their money. Clear communication about these risks is crucial for consumer protection.
However, in our review of company policies, only one (Apple Cash) provided a clear explanation that scams are not unauthorized payments. Three companies (Cash App, Venmo, PNC) provide vague explanations of what transactions are ‘unauthorized’ and which are not, and the remaining seven companies provided no explanation in their user-facing policies.”
A recent Senate subcommittee report found JPMorgan Chase, Bank of America and Wells Fargo reimbursed people who reported Zelle scams 38% of the time in 2023, compared to 62% in 2019.
The report also found the three banks collectively refused to reimburse $320 million in unauthorized Zelle transactions that customers reported as fraud between 2021 and 2023.
Last year, Zelle changed its reimbursement policy to include some types of impostor scams, such as when a scammer impersonates a bank to steal cash.
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