Exactly what title says, why is there no way to recoup zelle definitely or wire transfer(maybe?) but if banks send money to wrong person there are severe penalties for not returning.
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The only reason Zelle is free is because they don’t have to spend a bunch of money on overhead to deal with fraud cases.
If people can’t learn some damn sense and keep fucking this up we’re going to be stuck with 48-Hour wait periods and transaction fees again.
I’m no banker but my friend is. She has been over the ACH (and or) wire departments for several banks. Essentially, there are a shit ton of rules, regulations, laws, and levels of compliances banks are REQUIRED to follow for ACH and wires in order to ensure that ACH and wires are reliable and dependable. They shore up what’s been sent and received everyday by like 2-4 PM. It’s mandatory, and they have to send a report of that information to somebody (I don’t know if it’s the Fed reserve or the government). Whoever gets it relies on it, and the next person relies on it.
They can’t do that if you get to take it back (or change your mind). In that case it’s not reliable. Yeah, the app/your account says Johnny sent you $5 via Zelle, but tomorrow Johnny can take back his ($5) so now the reports are wrong, the decisions those reports are based on are wrong, and you don’t accept Zelle anymore because you never know whether you can rely on the fact that the money has actually been paid.
So, its treated like cash. Johnny pays you $5 cash, Johnny got to pry that $5 out of your cold dead hands, take you to court, or take it by force. All of which are extremely unlikely and even if it does happen takes time and process. We can rely on the fact that he gave you $5.
Similar issue came up in my work today. Somebody wanted to pay a debt with a credit card. For reasons, we can’t accept that. He can pay us in cash or a postal money order, certified check, or he can wire it to us. That way we know he can’t take it back. If he pays with a credit card, we could settle the debt, he could dispute the charge and now we owe the person HE owes the debt to. ACH and wires are meant to prevent this type of thing. I feel confident as a business owner that imma get my money; not so much with a credit card.
As others have said, there are different payment rails each with differing rules. For wire transfers, once that money is gone, it’s gone. The originating institution can issue a recall, but that’s really just a request and the receiver has no obligation to give that back. For ACH, the originator has 5 days to reverse a transaction. Provided it’s for one of the allowed reasons, sending to wrong account is one of them, the receiver is obligated to give back the money. These are NACHA rules. Zelle isn’t a new payment rail, but really just an ACH transfer. You should be as the originator allowed to reverse the transaction if you sent to the wrong party.
Edit: I just read Zelle’s TOS and looks like they state that you are SOL if you send to the wrong person. That is a choice they are making. The originating institution 100% has the right per NACHA guidelines to reverse that transaction if sent to the wrong account.
Someone convincing you to send them cash to an account is not the same thing as an employee fat fingering an account number and depositing to the wrong account.
Best to get in the habit of sending a low value test transaction and getting confirmation of receipt prior to sending the big $$$.
There is no difference. If you Zelle someone money and they should know it’s a mistake, they cannot spend it, and you can sue them to get it back.
The “difference” here is that it’s not *Zelle’s* problem that you sent money to the wrong person. You have to go and contact that person yourself, just as the bank does. There’s also the fact that you’re probably not sending people enough money that it would make sense to spend the time, money, and effort to try to get it back.
If the bank makes a mistake, they’ll ask for the money to be returned.
If you make a mistake (doesn’t matter on zelle, venmo, PayPal, wire transfers, or direct transfers in other countries), you have to ask the person themselves to give you the money back, sue them, or call the police on them if you have a case. The bank will not help you get the money back because they don’t know if you made a mistake or you’re trying to scam the other person.
If someone transfers money to you from a stolen account, it will most like cause a criminal case and the money will be returned. Even if the money was used to buy something from you that you gave away. Again, it’s true with all transfers.
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These are the agreements you sign when you use a bank account and Zelle. You agree that banks can fix their errors. You also agree that Zelle payments sent by you are final and will not be reversed.
The technology to reverse Zelle payments exists, and is used in cases of fraud. But their user agreement says they will not use that technology if you make a mistake.
It’s a constant battle between convenience and security.
In order for things to be convenient and fast, they generally have to take a hit to security and vice versa.
These impersonal and quick payment apps function under the assumption that you know the person who you are sending money to, so you are doing the verification process yourself. In theory it’s the same as giving 20 dollars of physical cash to a person. You gave it to them personally because you know them and owed them 20, they will pay you back, or they will provide a service for those 20. If they don’t, well, you chose the wrong person to trust and so the loss is on yourself.
If more complicated security functions were in place, such as stronger verification methods then these apps would be too annoying to use for such kinds of small transactions.
The other end of this spectrum would be like an ACH transfer. I don’t know too much behind the security details but that is a much more official type of transaction and so any parties involved are likely to be more verified and traceable.
Having said that, banks DO try to put as many security features in place. I stupidly used Zelle to send a small amount of money to a scammer because I was new to the system, I was jet lagged, and I was dealing with the death of a family member and a load full of official responsibilities. So, thinking I was actually paying an owed back bill, I sent it to someone. The transaction was never approved, and immediately after I realized it was a scam, I called and confirmed with the bank to not allow it through. So I guess they use some algorithm or a blacklist to prevent such types of transactions but that’s always a cat and mouse game and you can’t rely on that 100%.
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