Chuck Brown sent money to the wrong person through Zelle. Will he ever get it back?
Brown thought he was sending $850 to a truck driver delivering his car from Florida to Minnesota. Instead, he missed the number by a digit and sent the payment to someone who took the money and then was heard from no more.
Brown’s case is common. My advocacy team has received many similar Zelle cases. But this one’s a standout because it reveals so much about the process of fixing Zelle mistakes.
For example:
- How do banks investigate errors made through Zelle?
- How long does it take for a bank to investigate a mistake through Zelle?
- How do you appeal a denial of a Zelle transaction reversal?
Brown’s problem answers all of those questions. And you’ll want to know them before you make another payment through Zelle.
What is Zelle?
Zelle is a peer-to-peer payment service that allows you to send money to friends and family. Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo own Zelle. You must have an account with one of these banks to use Zelle.
Zelle connects your existing account with one of these banks, which makes the payment service easy to use. Perhaps too easy. But the banks also treat the transactions as irreversible. If you make a mistake, it could be difficult — or impossible — to resolve.
“Mistyped” one digit in a phone number
So what happened to Brown?
He’d contracted a truck driver to deliver his car to Minnesota. The driver asked him to pay with a Zelle transfer of $850 when he received the vehicle. He met the driver at a designated place and initiated the transfer.
“I mistyped one digit in his phone number,” he recalls. “I hit send. Several minutes went by, and he didn’t see the funds pending in his account, so we checked the information again and found the phone number error.”
There was no way to cancel the transaction on his phone. Brown called Charles Schwab, his financial institution, and filed a dispute within 20 minutes of the transfer.
“I gave them three weeks to resolve the issue,” he remembers. “But today I received notice that they could not resolve it and have closed my dispute. I have tried to call and text the phone number the funds were sent to and have gotten no responses.”
What if a Zelle payment is sent to the wrong person or for the wrong amount?
If you send money to the wrong person, you may be able to cancel your payment through your bank’s digital payment app. If the person to whom you have sent the money doesn’t claim it, you might be able to reverse the transaction, but it depends on the bank.
Zelle says you can only cancel a payment if the recipient hasn’t yet enrolled with Zelle. So if you’ve sent money to the wrong person, or if you’ve sent the wrong amount, you probably can’t claw it back.
Brown followed the right steps to resolve his problem. He contacted his bank immediately and filed a dispute. Under Regulation E, he has certain rights to dispute an incorrect electronic fund transfer to or from his account. I go into more detail in my guide to Zelle scams.
Unfortunately, his bank turned him down.
How do I get my money back if I accidentally sent it to the wrong person?
If a cancellation is an option, you can visit your bank online or through its app. You should do this as quickly as possible.
For example, if you are a U.S. Bank customer, you can go to the bank’s site.
- Click on “Send Money” at the top of the page.
- Choose “Send Money with Zelle.”
- From the “Actions” section, pick “Transactions Timeline.”
- Choose the “Scheduled” tab to see a list of your scheduled payments.
- Then select “Cancel payment” next to the one you no longer want.
If a cancellation is not an option, you will need to contact the bank to initiate a formal dispute.
Interestingly, U.S. Bank (like all others) clearly states in its digital services agreement that it is not responsible for the transactions.
Here’s the language from U.S. Bank:
You acknowledge that any messages sent in connection with sending, receiving, or requesting money through the Zelle Network are initiated by you and that we (and affiliated Service Providers) only facilitate the delivery of such messages on your behalf. To the extent required, you are responsible for gaining consent from any person or entity to whom you intend to send messages and/or money using any of the Digital Services.
But that is not how the government — specifically the Consumer Financial Protection Bureau — sees it. The bureau has repeatedly suggested that banks should help customers who have made erroneous transfers and that Regulation E covers these transactions. We are expecting guidance from the bureau soon, which would clarify the banks’ responsibility.
How do banks investigate mistakes made through Zelle?
Banks are largely silent on the process of disputing a Zelle transaction. However, we know that Brown’s financial institution, Charles Schwab, takes a rigid — and possibly illegal — position on erroneous transfers:
If the person you sent money to has already enrolled with Zelle, the money is sent directly to their bank account, and the payment cannot be canceled. This is why it’s important to send money only to people you trust and to always ensure you’ve used the correct email address or U.S. mobile number when sending money.
Its initial position seems to be that there is no dispute process. But that’s nonsense. I furnished Brown with Charles Schwab’s executive contacts, as well as Zelle’s executive contacts, and he got the process going.
“I tried to contact Zelle and was told all communication needs to go through my financial institution when paying through a bank app,” he says. “When I call my bank, however, they reply that the dispute process is with Zelle and they don’t have any more information than I do, so I can’t contact anyone to find other options to get the funds back.”
So the quick answer to the question, “How do banks investigate mistakes made through Zelle?” is: They don’t. Instead, they point the finger at Zelle. And Zelle points the finger right back.
How long does it take for a bank to investigate a claim made through Zelle?
One month after the mistaken transfer, here’s where things stood: The mysterious recipient of Brown’s $850 was still unknown. Brown had reached a banker at Charles Schwab who assured him he would investigate the matter by contacting Zelle. But the money was still missing. Charles Schwab told him it was gone forever and there was nothing they could do about it.
Then, in late February, he finally made a breakthrough.
“I have a new development!” Brown told me in an email. “Believe it or not, I finally reached the recipient of the $850 this afternoon. I’ve been trying to call the number many times. It was an older lady who answered and said she had been in the hospital and didn’t see my calls.”
The woman said she had seen the $850 in her bank account and had contacted her bank to find out where it had come from. She had also reached out to Zelle to fix the mistake.
“According to her, neither Zelle nor anyone else ever had contacted her about this misdirected money,” he says. “This makes me wonder what Zelle does with their dispute investigation.”
Indeed.
“Chris, every time I called Charles Schwab, they told me that they’ve talked to a Zelle investigator and they’re still working on it. Come to find out, neither the other party nor the receiving bank were ever contacted.”
And by the way, Brown’s story is not an isolated example of banks and Zelle dragging their feet. There doesn’t seem to be any rule or regulation that an erroneous transfer must be investigated within a certain time frame. As a result, banks can take their time — or never start an investigation.
How do you appeal a denial of a Zelle transaction reversal?
Just as there’s no formal process for initiating a dispute of an erroneous transaction through Zelle, there is no formal process for an appeal.
Brown says the woman was amenable to sending the money back and had instigated a reversal through her bank two days ago. But nothing happened.
“The funds aren’t back in my account yet, but she seemed genuine and sincere so I’m hoping this is resolved,” he says. “I don’t believe they’re doing their due diligence in trying to get the money back.”
Brown appealed to the bank and Zelle again by phone. Our team always recommends appealing in writing, but since there is no formal mechanism for an appeal, a call is just fine. Heck, smoke signals would probably work, too. Just let them know you are unhappy with the outcome.
At this point, I offered to step in and mediate the dispute. Here’s our conversation:
Me: Chuck, I can reach out to your bank if you believe the process is not working.
Brown: I called Charles Schwab again yesterday and they took all my notes and sent an email to Zelle and asked me to wait 24 hours. I’m going to give it one more day before I escalate and if you could help if it’s not here by tomorrow, I would appreciate it. I presume the funds were returned by the other bank and are still in some reconciliation account at Zelle waiting to be researched. But with all the information I’ve given them, it should be very easy to research. Zelle has not performed well at all at helping resolve this, unfortunately.
So I said OK, let’s wait.
But honestly, this process is seriously flawed and probably illegal. Zelle and its banks need a formal process to investigate claims like this and a fixed timeline for resolving them. Brown’s transaction had happened in January, and his money had been missing for almost three months by now.
Here’s your refund, but …
A few days later, Brown contacted me again. He had phoned Charles Schwab again, and a representative promised to send a message to the Zelle investigator again.
“It sounded like the Zelle investigator had never responded to the earlier message from last week,” he recalls. “I decided to talk with a supervisor at this point who agreed to send another message from him directly to the investigator. But he informed me it could take up to 90 days for these issues to be resolved.”
Finally, someone put a timeline on a Zelle investigation: 90 days.
At this point, I was ready to make some calls of my own. But Brown wanted to let the process play out, so I let him.
And a few days later, success:
Hello Chris, good news! I think my pressing the issue to a supervisor helped. The $850 errant transaction was refunded into my account on March 1, the same day I escalated the issue to the supervisor and he told me it could take 30-90 days to resolve but he would personally send an email to the investigator at Zelle. So long story short, I received my money back from the errant transaction.
Brown believes he would have never received the refund if he hadn’t pressed the issue. He had already received notices from Charles Schwab that Zelle had exhausted all recovery attempts and was closing the file.
“I took it upon myself to contact the person who incorrectly received the funds and then had to make numerous calls to Charles Schwab to get them to reopen the claim and get my funds back,” he says. “Interesting to note that when I spoke to the woman who got the funds in error, she was adamant that no one from Zelle had contacted her or her bank to get the funds back. She had already had the transaction reversed a few days before I talked with her so she was trying to do the right thing and I’m sure if Zelle had reached out through her financial institution earlier, it would have been resolved quicker.”
Is Zelle safe to use?
So should anyone use Zelle? At this point, my advice would be to avoid Zelle. There are safer ways to pay (such as credit cards or even checks) where you can initiate a dispute or stop payment.
Brown’s case exposes the shortcomings of Zelle — and there are many.
- Often, you can’t cancel a Zelle transaction, even if you catch it quickly.
- There’s no way to formally dispute a transaction through Zelle.
- There’s no way to appeal your bank’s predictable decision to deny your dispute.
- Also, there’s no timeline for a dispute or appeal. It might be 60 days or 90 days. Or never.
- Banks do not prioritize Zelle disputes because they are not regulated in a meaningful way.
Other platforms, such as Venmo, have similar policies as Zelle but dramatically fewer complaints. The likely reason: Venmo offers support for anyone who makes a mistake and addresses the issue quickly.
Brown could have easily avoided this problem by making a $1 test transaction to the truck driver’s account. If it didn’t arrive, he would have only lost $1. Or he could have asked the truck driver to send a money request through Zelle. Or he could have just written a check for $850 or paid in cash.
And there is one more unanswered question. If the woman to whom he accidentally sent $850 had already returned the money, and Schwab had told him the money was gone, then what would it have done with the returned cash? Is there an enormous unclaimed refund account at Charles Schwab that the bank will ultimately pocket?
If the Consumer Financial Protection Bureau ever decides to investigate these erroneous transactions, maybe it can find out and let us know.
