Thread by @latimes

Credit cards and digital payment apps such as PayPal offer some distinct advantages over cash, including the ability to recover money paid to scammers.

But #Zelle, a digital payment network owned by seven major banks, isn’t so protective of its users.

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If you use Zelle to pay someone who proves to be a fraud, you have only a slim chance of recovering the money from your bank. The same is true if you send money to the wrong person. If you hit Send, the money is probably gone.

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"I think [Zelle is] growing in popularity with scammers because it has some significant advantages from their perspective," said Kevin Roundy, senior technical director of the internet security company NortonLifeLock in Culver City.

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Some critics argue that Zelle and its banking partners are misinterpreting the federal Electronic Fund Transfer Act of 1978 and the regulation implementing it, which shield consumers from much of the liability for “unauthorized” transfers.

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According to Zelle and its partners, if you knowingly send cash to someone who’s taking your money under false pretenses, that’s an authorized transfer under the law.

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But under a class-action lawsuit filed in Orange County, the plaintiff argues that when someone induces you to send them money as part of a scam, that person is initiating a transfer without your authorization.

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The Consumer Financial Protection Bureau could try to settle this dispute, but it hasn’t done so — yet.

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