Business
Zelle scams prompt federal probe into whether banks are doing enough to protect customers
The online-payment platform Zelle is extremely popular with consumers, which helps explain why it’s also become a hit with scammers.
Another reason: Zelle payments can’t be reversed once they’re sent. They’re a nearly instantaneous transfer of cash from your account to someone else’s, and if that someone else is a scammer, you can’t simply stop the payment (like a check) or dispute it (like a credit card).
Now, the federal regulator overseeing financial products is probing whether banks that offer Zelle to their account holders are doing enough to protect them against scams. Two major banks — JPMorgan Chase and Wells Fargo — disclosed in their security filings in the last week that they’d been contacted by the Consumer Financial Protection Bureau.
According to the Wall Street Journal, which reported the filings Wednesday, the CFPB is exploring whether banks are moving quickly enough to shut down scammers’ accounts and whether they’re doing enough to identify and prevent scammers from signing up for accounts in the first place.
The CFPB declined to comment on the story, and none of the banks contacted by The Times would talk about the details of the CFPB’s probe. JPMorgan Chase’s official response, though, was combative, suggesting the bank would fight the regulators if the CFPB demanded significant new protections for consumers.
“The CFPB is fully aware we already go above and beyond what the law requires, reimbursing for all unauthorized transactions and even for certain types of scams, so they should expect to be challenged to ensure their actions stay within the bounds of the law,” a spokesperson for the bank said in a statement. “Our customers love Zelle, among the safest ways to pay people you know and trust, in real time and at no extra cost, and if necessary we will not hesitate to seek assistance from courts to uphold the integrity of how these services are provided.”
Here’s a rundown of the issues and how Zelle users might be affected by the CFPB’s inquiry.
Are scams a problem on Zelle?
A J.D. Power survey this year found that 3% of the people who’d used Zelle said they had lost money to scammers, which was less than the average for peer-to-peer money transfer services such as Venmo, CashApp and PayPal. The chief executive of Early Warning Services, which runs Zelle, told a Senate subcommittee in July that only 0.1% of the transactions on Zelle in 2023 involved a scam or fraud.
But Zelle operates at such a large scale — 120 million users, 2.9 billion transactions and $806 billion transferred in 2023, according to Early Warning Services — that even a tiny percentage of scam and fraud problems translates into a large number of users and dollars.
Scam activity generally is rising fast. According to the Federal Trade Commission, more than 41,000 consumers reported scams involving online-payment apps in the first half of 2024, with losses amounting to $171 million. That’s well over the pace of scams reported in 2023.
Early Warning Services insists that Zelle is bucking the rising tide of cons. From 2022 to 2023, Zelle cut the rate of scams by nearly 50% even as the volume of transactions grew 28%, resulting in less money scammed in 2023 than in 2022, said Ben Chance, the chief fraud risk management officer for Zelle.
The company didn’t disclose the amounts involved, but if 0.1% of the $806 billion transferred in 2023 involved scam or fraud, that would translate to $806 million.
Do Zelle users get reimbursed for scams?
Only in certain cases, and this is where the banks that offer Zelle have drawn the most heat.
If you use Zelle to pay a scammer, banks say, that’s a payment you authorized, so they’re not obliged under law to refund your money. Federal law requires reimbursement only for unauthorized transactions, such as when someone hacks into your account or surreptitiously uses an app on your phone to make payments.
In June 2023, Zelle started requiring banks to reimburse customers who were duped into paying scammers who posed as representatives of the bank, the government or a service provider with whom the customer had an existing business relationship (for example, a phone company). The policy is similar to one Bank of America adopted in 2021.
That change led to banks reimbursing more customers who were scammed on Zelle — according to a Senate report, reimbursements totaled $18.3 million in the last half of 2023 — but 80% to 85% of the consumers who reported being scammed still got none of their money back, the report said.
What do banks and Zelle do to try to stop scams?
The heart of the CFPB’s inquiry appears to be focused on this question.
Chance said that, under Zelle’s rules for participating banks, whenever a consumer reports a scam or fraudulent transaction, the bank has to report that to Zelle, which will in turn inform the receiving bank of the complaint. That’s true even for transfers within the same bank. The receiving bank is then required to conduct a fraud investigation on the recipient and report back to Zelle.
Some banks, such as Bank of America, say they will put a freeze on transfers by a suspected scammer as soon as a report comes in, then investigate and, if the report is substantiated, seize and return the money. But that works only if the scam is reported right away, before the scammer has the chance to withdraw the funds — which many will do immediately, said Iskander Sanchez-Rola, director of innovation at the cybersecurity company Gen.
Plus, the bank has to agree that a scam occurred. Adylia Roman of Los Angeles said she fought in vain with Bank of America for months to recover $2,700 lost from her savings account through Zelle; the bank insisted that the transfer was authorized by her son, who says he did no such thing and had no idea who the recipient was.
If there is a second complaint about an individual committing scams or fraud, Chance said, Zelle will probably suspend that person’s access to the network until an investigation is completed. But Zelle can’t freeze the money in dispute — it’s up to participating banks to decide how to respond to the reports that Zelle forwards.
Early Warning Services also requires banks to take more steps to ensure that customers know the people they’re sending money to and that they understand the risk. Before allowing a transfer to a new recipient, Zelle requires banks to send in-app alerts showing the verified name of the person holding the account where the money is being sent, and then warning that money should be sent only to people the user knows and trusts because the transfer is irrevocable. The user has to accept those terms before the transfer can be completed.
At the same time, Chance said, Zelle sends screening information about the recipient to the sender’s bank, which the bank uses to decide whether the transaction is too risky to approve.
How might consumers get more protection?
One change that could make a difference would be to limit when funds transferred via Zelle are available for withdrawal, as banks do with check deposits. That would give senders time to call off transactions they realize are suspicious.
Anything less than near-instant transfers, however, would probably drive users to other instant-payment services, Sanchez-Rola said.
Banks could also impose more restrictions on how Zelle users add new recipients. Although banks tell consumers that Zelle is designed for sending money to people they know and trust, there’s nothing stopping them from sending money to complete strangers, as long as contact information is available. That openness makes it easier for criminals to pull off their scams.
PayPal and Venmo address this issue through a buyer protection system for goods or services that’s mandatory on PayPal and optional on Venmo. Under this approach, the recipient of a payment has to pay a fee that helps reimburse consumers who are scammed.
Perhaps the biggest issue is making Zelle users more attuned to risks. Sanchez-Rola said that many people assume Zelle is risk-free because they access it through a regulated bank, and because people they know and trust use it for everyday things. So when someone they don’t know asks to be paid via Zelle, they’re not as skeptical as they should be.
“You shouldn’t use these kinds of [payment services] unless you fully trust the person,” he said. “That’s what they were designed for. They are not for getting your concert tickets quickly from some unknown guy.”
Sanchez-Rola suggested that Zelle could send more information about the recipient of a proposed transfer to the sender, displaying any potential red flags before the money is sent. He also recommended that Zelle users employ cybersecurity products that help detect scams and phishing attempts. (Gen owns Norton and Avast, which make cybersecurity products.)
“Having solutions that can help people is important,” he said. “You cannot just fully trust your bank.”
Some consumer advocates are calling for a more sweeping approach, amending the Electronic Fund Transfer Act to require banks to reimburse consumers who are duped into authorizing payments to scammers. Rep. Maxine Waters (D-Los Angeles) and Sens. Elizabeth Warren (D-Mass.) and Richard Blumenthal (D-Conn.) introduced bills in the House and Senate this month to do just that.
Business
California-based company recalls thousands of cases of salad dressing over ‘foreign objects’
A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”
The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.
Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.
None of the 42 locations where the product was sold were in California.
Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.
“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”
The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.
The company recalled the following types of salad dressing:
- Creamy Poblano Avocado Ranch Dressing and Dip
- Ventura Caesar Dressing
- Pepper Mill Regal Caesar Dressing
- Pepper Mill Creamy Caesar Dressing
- Caesar Dressing served at Costco Service Deli
- Caesar Dressing served at Costco Food Court
- Hidden Valley, Buttermilk Ranch
Business
They graduated from Stanford. Due to AI, they can’t find a job
A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.
The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.
When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.
Top tech companies just don’t need as many fresh graduates.
“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”
While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.
Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.
“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”
The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.
Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.
“The industry for programmers is getting very oversaturated,” Akgul said.
The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.
Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.
It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.
In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.
Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.
Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.
A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.
“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”
To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.
Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.
Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.
Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.
As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.
“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”
After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.
Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.
“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”
Business
Disney+ to be part of a streaming bundle in Middle East
Walt Disney Co. is expanding its presence in the Middle East, inking a deal with Saudi media conglomerate MBC Group and UAE firm Anghami to form a streaming bundle.
The bundle will allow customers in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE to access a trio of streaming services — Disney+; MBC Group’s Shahid, which carries Arabic originals, live sports and events; and Anghami’s OSN+, which carries Arabic productions as well as Hollywood content.
The trio bundle costs AED89.99 per month, which is the price of two of the streaming services.
“This deal reflects a shared ambition between Disney+, Shahid and the MBC Group to shape the future of entertainment in the Middle East, a region that is seeing dynamic growth in the sector,” Karl Holmes, senior vice president and general manager of Disney+ EMEA, said in a statement.
Disney has already indicated it plans to grow in the Middle East.
Earlier this year, the company announced it would be building a new theme park in Abu Dhabi in partnership with local firm Miral, which would provide the capital, construction resources and operational oversight. Under the terms of the agreement, Disney would oversee the parks’ design, license its intellectual property and provide “operational expertise,” as well as collect a royalty.
Disney executives said at the time that the decision to build in the Middle East was a way to reach new audiences who were too far from the company’s current hubs in the U.S., Europe and Asia.
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