Cash is King

Last month I turned 50, and more and more I’m starting to feel my age.

For example, a few weeks ago I worked the concession stand before my son’s volleyball game. A high school girl came up to the counter and declared that she was starving, but didn’t have any money. I quickly explained capitalism to her and that in exchange for goods, she needed to give me currency, especially when we’re trying to fundraise.

Frustrated, she then asked if we accepted credit cards. When I replied that we did not, she then asked if she could ‘Venmo’ money to me and then I could buy food for her with my cash. I graciously declined, seeing that other customers were getting restless.

As she angrily plodded off, another high school girl quickly took her place. She was really craving M&Ms, which cost $2, but she only had $1. She wanted to know what we could do about that. I suggested selling plasma.

Peer-to-peer payment services, like Venmo or PayPal, allow sending funds from one bank account to another via an app on a smartphone. More than 1,700 banks and credit unions currently offer this service. I recognize this is the wave of the future, especially since it seems that kids’ entire lives revolve around their phones. But I’m old – I prefer using cold, hard cash.

While my kids think I’m a crazy fossil, I felt a little better about my antiquated ways after hearing about a recent report released by Senator Elizabeth Warren’s office.

Earlier this month, the Massachusetts’ senator issued a report revealing that incidents of fraud and scams are occurring more often on Zelle, another popular peer-to-peer payment service. The report also showed that the large banks that partly own Zelle have been reluctant to reimburse customers who have been victims of fraud or scams. In fact, less than half of the money customers reported being sent via Zelle without authorization was being reimbursed.

Zelle was launched in June of 2017, and has since become a popular way for bank customers to send money to friends and family. According to Early Warning Services, the company that operates Zelle, almost half a trillion dollars were sent through the app in 2021 alone.

While Early Warning Services claims that 99.9% of all transactions happen without complaints of fraud or scams, numerous news outlets have reported incidents of people being ripped off. So, this spring, Warren and some of her colleagues requested data on fraudulent transactions involving Zelle from the big Wall Street banks that use and partly own Zelle, including JPMorgan Chase, Wells Fargo, PNC Financial, Truist, Bank of America, Capital One and U.S. Bank.

Under the Electronic Fund Transfer Act, banks are required to repay customers when funds are illegally taken out of their account without authorization. Data from four of the banks reflected 192,878 incidents occurring in 2021 and the first half of 2022 where a customer claimed they had been fraudulently tricked into making a payment. Collectively, these incidents totaled $213.8 million. However, in only about 3,500 of these cases the banks reimbursed the customer. Additionally, only 47% of funds taken out of customers’ accounts without their authorization were returned.

While banks generally reimburse customers whose accounts were accessed without authorization, they are reluctant to reimburse customers who were scammed, arguing it’s difficult to prove and could encourage false claims.

I jokingly told the high school girls that the concession stand did accept traveler’s checks, but they just gave me the same irritated and confused looks my kids also give me whenever I reference anything from the ‘80s.



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Reg P. Wydeven

Elder Law and Estate Planning Attorney at McCarty Law LLP
Hoping to follow in his father’s footsteps from a young age, Reg’s practice primarily consists of advising individuals on estate planning, estate settlement and elder law matters. As Reg represents clients in matters like guardianship proceedings and long-term care admissions, he feels grateful to be able to offer families thorough legal help in their time of need.
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