Following this announcement, the bank will begin requesting additional information on payments that are believed to originate through contacts on social media platforms. The bank could deny or block them, according to the changes reflected in its updated terms and conditions.
Nearly 50% of scams reported to JPMorgan by its customers originate on social media, with many scammers asking for payments through Zelle or wires. In 2022, customers of Chase, Bank of America and Wells noted that they lost a combined total of USD 465 million to scams fraud on Zelle.
JPMorgan Chase's terms and conditions previously noted that Zelle does not have purchase protection, but the new language clarifies that the bank will take additional steps to slow or stop the suspicious payments.
The bank aims to protect its customers from scams that originate on socials, emphasising that Zelle is not a payment platform for the sale of goods and services, even if users utilise it as such.
JPMorgan Chase may request information about payment purpose, method of contact with recipient or other details it deems appropriate to assess whether its client’s payment has an elevated fraud risk, or is an illegal, ineligible or improper payment.
The bank may further decline payments or restrict clients’ use of Zelle if they do not respond truthfully to inquiries about transactions.
Social media is a prime place for fraudsters to thrive because most platforms do not have any mechanism to distinguish a validated seller from an unvalidated one. That includes more traditional marketplaces, such as Facebook, and up-and-coming ecommerce venues, including shoppertainment, on Instagram or TikTok Shop.
Zelle, Venmo and CashApp are frequently used by scammers to facilitate payments as these platforms offer irrevocable payments. Common social media scams include concert and sporting events, property rentals, sales, leases, car parts, pets and furniture, according to the bank.
Around 3% of Zelle users reported losing money to scammers, compared to the average 7% on all other P2P payment apps, according to July 2024 JD Power study. 5% of users reported sending money to the wrong person, compared to 7% across other brands.
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