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The policy change aims to give consumers greater safeguarding from social media and messaging app marketplace scams.
The rationale for policy change
The Chase Bank’s move is based on startling statistics that show a high percentage of reported scams point back to the use of social media. The bank reports that nearly 50% of the scams reported in the run-up to the end of 2024 were via social media platforms. The report highlights the greater risk that customers are exposed to when they perform financial transactions with strangers whom they meet on the internet.
A representative from Chase validated the intent of Zelle, and that is to use the service for peer-to-peer money transfers between familiar people, and not using the service to purchase goods and services from strangers on social media. That is for the sake of educating Zelle users on the correct and safe use of the Zelle product.
Implementation details
Beginning March 23, 2025, Chase will start adding extra steps to “decline or block” Zelle payments that are known to be originating from social media marketplaces or messaging apps, especially when the payment source seems suspicious. The bank will ask the customer to provide more information about the recipient and the purpose of the payment so that they can assess possible risks of fraud. The bank informed the Associated Press that it is doing so to capture and stop scam payments before reaching customers’ accounts.
Background of regulatory scrutiny
The policy change is made as regulators step up supervision into the security of peer-to-peer payment apps. In December 2024, the Consumer Financial Protection Bureau sued large banks JPMorgan Chase, Wells Fargo, and Bank of America for failing to do enough to protect consumers against fraud on Zelle’s network. The complaint asserts that the banks have insufficient protection measures and routinely deny relief to fraud victims at a high cost. The CFPB wants relief for the consumers who are injured and need more anti-fraud protections across the entire banking industry.
Advice to customers
Chase advises customers to use caution in sending money via Zelle and restrict transactions to individuals who know them in person. The bank explains that Zelle should not be used for buying goods and services from unverified sellers, particularly those which are obtained from social media advertising or websites. The customers are warned that transactions via Zelle are not insured by purchase protection; therefore, in the case of failure on goods or services to be received as agreed, it will be hard to reclaim the money.
To assist in educating customers, Chase recently redesigned its online guidance, including how-to instructions to spot and circumvent social networking scams. Customers are being asked by the bank to take a few minutes and go over the tips so that they can effectively protect themselves during online transactions.
Industry-wide implications
Chase’s move is part of a larger bank trend to heighten security checks at electronic payment locations. As advanced internet scams are being conducted, the banks are under pressure to overhaul technology and policy to attempt to protect consumers. Chase’s move can be used to pressure other banks to place similar bans or expand fraud protection to prevent risks of transactions conducted on social networking sites.
While these activities add more steps consumers must follow when conducting transactions, they need to do so in order to protect the economic welfare of customers in today’s more international and electronic economy.
