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Payments-app war drags banks into discomfort zone


Banks tend to have a consistent message for customers who unwittingly make payments to scammers: tough break. Times are changing, however. Rapid growth in digital payments has brought out a softer side in lenders such as JPMorgan (JPM.N) and Bank of America (BAC.N).

Zelle, the payment service owned jointly by seven of the biggest names in household finance, has tweaked its policy and started compensating casualties of some fraud. If the con artist was posing as the victim’s bank, a government agency or a legitimate company – say, a utility – the sender’s bank will return the funds if other criteria are met and recoup them from the recipient’s bank. The policy applies to all 2,100 lenders in the Zelle network.

The rip-offs covered are narrow, though. Users who thought they were buying discounted tickets to see Taylor Swift or a new kitten will find no succor. Still, even the limited concessions at Zelle, which moved some $200 billion for customers in the second quarter, nudge banks away from the golden rule of finance: Every transaction has clear rules and both sides must adhere to them. The tide is turning in a merciful direction.

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