Chase to Restrict Use of Zelle for Purchases Through Social Media

Chase told customers that it will add some restrictions on their use of the peer-to-peer payment network Zelle with Chase beginning March 23.

The changes in the bank’s Zelle service agreement were noted in multiple media reports.

The new provisions include Chase saying that it may delay, decline or block Zelle payments from Chase accounts that originate from contact through social media; may request information from the customer to assess whether a payment has an elevated fraud or scam risk or is an improper payment; and may decline payments or restrict customers’ use of Zelle through Chase if they do not respond truthfully to the bank’s questions.

The service agreement also cautions customers that neither Chase nor Zelle offer purchase protection for claims related to the purchase of goods or services, such as non-receipt, damage or “not as described” claims.

“To help protect you from fraud and scams, the Zelle Service should be used for payments between friends, family and others you trust and should not be used to pay for goods from recipients with whom you are not familiar,” the service agreement said. “The Service is not intended, and should not be used, for the purchase of goods from retailers, merchants, or the like, including on or through social media or social media marketplaces or messaging apps.”

The Consumer Financial Protection Bureau (CFPB) sued Zelle operator Early Warning Services and three of its owner banks — Bank of America, Chase and Wells Fargo — in December, alleging that they failed to protect consumers from “widespread fraud.”

The agency’s complaint alleged that the defendants violated consumer financial protection laws by failing to implement safeguards on the payment network and denying assistance to consumers who filed fraud complaints.

It also alleged that the three banks failed to properly investigate complaints or reimburse consumers for fraud and errors.

In a statement provided to PYMNTS at the time, Zelle said that it had attempted to engage and cooperate with the CFPB on this matter, that 99.95% of payments sent via the payment network have no report of scams or fraud, and that the CFPB’s lawsuit will incentivize criminals to make false claims against banks and credit unions.