Mobile banking, which allows people to send and receive money with a few clicks of their smartphone, has exploded over the last several years.
With the increasing popularity of payment apps like Cash App and Venmo, more and more people are using the services to move money to and fro, but one of them — Zelle — has had more than its share of customer service complaints.
Clark: ‘Using Zelle is a risk’
Zelle is run by Early Warning Systems LLC, a financial services consortium that is actually owned by a group of big banks like Capital One, JP Morgan Chase, Wells Fargo, Bank of America and PNC Bank.
The banks, having long been the primary movers of customers’ money, have been caught flat-footed by the success of payment apps created by tech companies. Adding to the insult has been the fact that none of the competitors have had direct ties to banks.
“Zelle is something the banks have put out there to try to steal market share from these non-bank players,” Money expert Clark Howard says. “But unfortunately the banks have not done a good job with security on Zelle or customer service in the event that someone has a problem using it.”
Many of the issues with Zelle were detailed in a New York Times piece
earlier this year. The bottom line? “Person after person has had their money absconded with by crooks and the banks have said, ‘Tough on you,'” Clark says.
When people have complained to Zelle about fraudulent transactions, the company has frequently passed referred them to the participating bank, where customers sink into a quagmire of unresolved issues. Users have also run into brick walls when trying to retrieve money they mistakenly sent to the wrong person.
Contrasting Zelle with other payment apps, Clark says tech companies inherently focus on things like user experience and customer satisfaction.
“They’ve thought about it, and they come from a perspective of looking out for their customers as a way to go,” Clark says. “Banks don’t really respect the customer. It’s part of their culture. That’s why using Zelle is a risk.”
Here’s the only safe way to use Zelle & other payment apps
Because fraudsters are actively trying to get one over on you, Clark advises using Zelle (if you insist on using it) and other payment apps only when transacting with a person you know.
“Those platforms should only be used to pay a friend or family member money you owe them or that you want to give them. But never, never, never, not ever use these apps to pay a stranger.”
2 more keys to safeguard yourself when using payment apps include:
- Read the small print: Another way to stay safe is to always read the app’s terms of service. That way you know what you’re signing up for.
- Link a credit card, not a debit card: Linking a credit card instead of a debit card gives you distinct consumer protections if you need to get your money back. With a debit card, you’re using your money. With a credit card, you’re using the bank’s.
Here are some more articles you might enjoy from Clark.com: