JPMorgan Chase & Co is reportedly prepared to sue the U.S. government over scams related to the digital payment service Zelle. The bank claims that the automated system for recovering funds swindled via Zelle, which is adopted by U.S law enforcement and bank regulators, is ineffective and burdensome.
Chase argues the fast-fraud recovery system allows other banks who receive stolen money to delay or deny reversing transactions. Created by a network of banks, including Chase, Zelle is a widely used service that instantly transfers money between accounts. But Chase says the speed of transactions is being exploited by fraudsters.
The disputes are centered on a regulation called Regulation E, which sets rules for electronic funds transfers. While under this law, customers are typically not responsible for unauthorized transactions if they report them within 60 days, banks are probing allegations of fraud that often take months. The bank insists that the rushed process puts them at odds with the regulatory obligations and principles of fair dealing because it doesn’t give them enough time to thoroughly investigate fraud allegations.
Furthermore, Chase points out that the process confronts them with the risk of double refunds because it often doesn’t stop customers from disputing transactions through other means, such as credit card chargebacks.
In conclusion, JPMorgan Chase’s potential lawsuit underscores the challenges banks face in protecting customers’ money in the era of real-time digital transactions. The bank seeks for the government to reformulate its regulation regarding recovery processes of swindled funds, so it becomes more effective and less burdensome for the implementing banks.
