If I convince you to withdraw thousands of dollars in cash and then skip town with it, do we expect the bank to make you whole?
It would be trivial for banks to give customers better fraud protection tools and enable better recovery, but they clearly don't care. * For one, since you can't have a bank account anonymously the receiving bank knows exactly who stole the money. They should at least be able to refer them for criminal investigation. * Two, since they own the machinery of transferring the money, yes they can easily reverse fraudulent transactions -- the bank doesn't have to take a loss since the fraudster has to have an account with them. They know who to take it back from. * The fraudster withdrew the money and ran? ACH transfers have always taken up to 15 days to "clear" -- banks wouldn't let you withdraw money you just deposited exactly for this reason, to verify that the sending bank actually has the funds and there are no issues. Why can't Zelle let the sender specify a "hold" period so there is time to dispute the transfer and the funds can be recovered?
Basically is seems to me that a modern digital payment systems must have a kind of escrow service built in. IMHO this is what we need the law to require banks to do. In combination there needs to be a payment dispute resolution system which would probably take the form of a kind of arbitration system not unlike the role small claims court plays. This is something the banks should lobby the government to provide since doing it themselves would clearly get complicated and expensive.
If I'm selling you a car, I don't want a Zelle transfer for the money that I know you could claim was fraud and claw back from me - then I'm out the money AND the car; I'll demand cash in that case.
Essentially each transaction that is "refundable" is an implied contract between parties and it should be verifiable. Such as in the case of a car sale it is pretty easy for a third party to check if the car was received.
Or somehow have a notary to witness and verify the transaction.
This is the basic problem is that you can't have instant transfers with fraud prevention. It's impossible to claim that banks don't understand this and IMHO it should be considered criminal negligence that they pushed this product on consumers knowing that it just exposes them to easy fraud.
Incorrect. You only deserved one, not both. You don't get the money AND the car. It's either your car and someone else's money, or someone else's car and your money.
I think the solution is escrow. I am biased, because I work for an escrow company, but I've never seen a more effective approach. Hold the money until the buyer has what they paid for, and only then release the money to the seller. (To be fair, escrow does tend to be more expensive than simple money transfer, so it's not all upside.)
Banks are given a monopoly over an unavoidable, and very lucrative, aspect of modern life. No reason to give them that for free.