Zelle money transfer problems fixed at Bank of America. Customers were fuming

Bank of America experienced delays in online transactions conducted via Zelle for much of the day Wednesday, but those problems were resolved by the afternoon, the bank said.

On outage tracker DownDetector.com, irate customers reported missing funds and unexpected negative balances due to problems with the digital payment network.

“Zelle transactions made between January 14th and January 17th may be delayed in occurring and posting to accounts as requested,” the Charlotte-based bank said in an online notice, displayed when customers log into their bank accounts on Wednesday. “Transfers will be completed and will appear in your account activity and balances as soon as possible.

“We apologize for any delay or inconvenience.”

Bank of America declined to say what caused the outage, when asked by The Charlotte Observer.

The initial delay surprised account holders, many of whom took to Twitter and other social media to air their grievances. Some said the delay had caused their bank account to slip into the red.

“So cool how @BankofAmerica magically disappeared a large Zelle transaction that HAD ALREADY POSTED and I had used to pay bills,” one user posted. “Now I’m extremely in debt in my checking and I can’t get ahold of them. Unbelievable.”

Zelle users frustrated with delays

Customer reports of outages at Bank of America spiked on Wednesday morning, according to Down Detector.

“I woke up this morning to a negative balance. There is no way to speak to a customer service agent,” one user commented on the site. “This problem needs to be fixed immediately so (I) can have access to my funds!”

Another user wrote that she’d seen transferred funds disappear after using them to pay bills. She now has those funds back.

“(But) unfortunately 3 payments that went out yesterday after Zelle was in there (Car Payment, Car Insurance and Cell phone/Internet) all have been returned,” the user wrote. “This is not good. Now I have to call all these places and explain.”

What is Zelle?

Zelle is a peer-to-peer payment network similar to PayPal or Venmo. It allows users to digitally send money from their account to users at different banks.

Created in 2017, the network is operated by Early Warning Services LLC, a company co-owned by seven banks: Bank of America, Wells Fargo, JP Morgan Chase, Truist, U.S. Bank, PNC and Capital One. But many other banks use Zelle — a total of more than 1,700.

Zelle is now the country’s most widely used money transfer service, with more than double Venmo’s payment volumes, MarketWatch reported in October.

Unlike Venmo, CashApp or other similar services, Zelle transfers money instantaneously from bank account to bank account with no entity in between.

Zelle controversies and problems

The payment service also has been the subject of heightened scrutiny over the last several months, with legal advocates and lawmakers pointing to growing rates of fraud on the app.

In a Senate banking committee hearing in September, Sen. Elizabeth Warren chided bank executives for not responding to her request for data on the number of fraudulent Zelle transactions reported.

“You built the system, you profit from every transaction on the system and you tell people that it is safe. But when someone is defrauded, you claim that’s the customer’s problem,” the Massachusetts Democrat told the CEOs of America’s largest banks during the hearing.

Warren has continued her criticism of Zelle, tweeting as recently as Tuesday that she would continue to press banks on the issue.

“Zelle is a money-making bonanza for sophisticated scammers and fraudsters,” the senator wrote. “The big banks that own and operate the platform have a lot more work to do to make victims whole and protect consumers from future harm — so I’m going to stay on it.”

In November, Bank of America was the subject of a federal lawsuit claiming it marketed Zelle services as easy, safe and secure in large part because it was “backed by banks.”

Instead, the suit argued, Zelle comes with a high risk of fraud for consumers and little chance of being paid back by the bank if customers get scammed.

Capital One and TD Bank have faced similar legal challenges regarding their use of the payment network. Both suits said the banks marketed Zelle as safe without sufficiently warning customers about fraud risks.

And late last year, The New York Times reported that the banks behind Zelle had prepared a major rule change in 2023 that would compensate more customers who fall victim to scams. That would reverse the current policy which often sticks account holders with such losses, the Times reported.

This story was originally published January 18, 2023 11:48 AM.