JPMorgan Chase, Bank of America, and Wells Fargo are reportedly falling short in protecting their customers from scams and fraud amounting to hundreds of millions of dollars each year, as per a US Senate panel.

During a hearing conducted by the Permanent Subcommittee on Investigations, Democratic Senator and Chairman Richard Blumenthal raised concerns about the failure of these banking giants in safeguarding their customers. He revealed that customers of these banks filed claims to recover $456 million in 2022, all stemming from fraud and scams on the Zelle payments network.

Senator Blumenthal shed light on Zelle, branding it as a “dirty little secret” of the banks. He emphasized that while Zelle promotes itself as a quick and convenient money transfer service, it often leads to customers losing money due to fraudulent activities.

Blumenthal criticized Zelle, which is collectively owned by seven US banks, including Chase, BofA, and Wells Fargo, for providing a false sense of security to customers while exposing them to significant fraud risks.

The Permanent Subcommittee on Investigations discovered that out of the $456 million reported lost to Zelle scams in 2022, only $341 million was recovered. The panel also highlighted that 13% of users on Zelle and similar peer-to-peer payment platforms admitted to falling victim to scams.

In response to the Senate panel’s investigation, Zelle issued a statement through its parent company, Early Warning Services, LLC, reiterating their commitment to providing a secure service to consumers. They claimed that less than 0.1% of transactions on Zelle are reported as fraudulent, making it one of the safest ways for consumers to make payments to trusted individuals.

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