By Ally Marotti
WWR Article Summary (tl;dr) As Ally Marotti reports, there is plenty of excitement about mobile payment services like Venmo and Zelle. However, not everyone understands that instant payments do NOT have the same protection as credit card transactions.
When Michael O’Neil tried to pay the company that inspected the condo he bought last summer, he had no idea there was a company on the East Coast with a nearly identical name and an email address that differed by just four letters, until he sent $360 to the wrong business.
O’Neil, 37, sent the mobile payment using Zelle and has spent the last year trying to get the money back.
“It was my mistake, but one that I thought was immediately protected,” he said. “Four letters shouldn’t cost you ($360).”
Consumers want to be able to send and receive money as instantly as they can an email, whether they’re splitting the bill at a restaurant or sending allowance to their kids.
Tech companies and banks met that desire with products such as Venmo and Zelle. But lost in the excitement over the new technology was the understanding that instant payments don’t have the same protection as credit card transactions.
If a user sends money to the wrong person, it’s the sender’s responsibility, not the company’s.
While the customer may expect banks to retrieve their money, Zelle payments are treated the same as cash. There’s only so much financial institutions can do to get the money back. In its user agreement, Zelle recommends that users not send money to people they don’t know.
Venmo says it does not take responsibility for actions of recipients and doesn’t guarantee the identities of users.
Still, the mobile payment operators are adding some warnings after learning that customers are more prone to mistakes than they had anticipated.