"Only two million reported fraudulent transactions per year" :)

That's the same defense used for all recent failings of Big Tech at scale: "Well, when you sell as many apples as we do, of course you'll sell a few billion rotten ones. You can't expect us to check them all at this volume!"

Not really. Fraud is a function of all payment systems because of human nature, not because of the tech. You could implement all of this with paper and sliderules and there would still be fraudulent transactions.

The difference is that in big tech, the fraud is expected because of the scale, it's an amoral faceless algorithm. If you had a human verifying each transaction, you could blame (or at least appeal to) the human.

That human would likely do much worse than the algorithms. This is a real problem and as far as I know there is no way to get this resolved because the main reason the algorithm is able to outperform the human is because it enables a larger volume and so you have more data to work with.

This is the same reason why a PSP will always give you better fraud protection than rolling your own, they look at so much more data than you ever will that they will be able to better tell friend from foe. Fewer false positives and fewer false negatives. Still too much, but the theory is that in order to be able to detect fraud you will have to have some fraud!

> but the theory is that in order to be able to detect fraud you will have to have some fraud!

That fails to argue that having any fraud is beneficial; if you have no fraud, there is no value in being able to detect fraud.

Yes, but for that there would have to be no fraud. You can't know your error rate without having some known errors. Otherwise you may well be simply blind to the fraud that you do have but are not aware of.

That fraud by itself is not beneficial goes without saying.

That is true, but it also tends to make the original statement meaningless. Now you're saying that (1) "in order to detect fraud, you have to have some fraud", and (2) "everyone everywhere, with no exceptions, has some fraud". This means there is no requirement for being able to detect fraud that is not automatically satisfied by everyone. Why bother talking about a requirement that is automatically satisfied?

Because it is the degree of fraud that you catch that matters. Every financial system has fraud. In the old days - I used to work at a bank - the banks knew that there was fraud, but usually they didn't have a really good grip on how many of their transactions were fraudulent and how much of that they caught. The limitations on human resources alone made this a losing battle.

Just like any classification system a fraud control system has false positives, false negatives, true positives and true negatives. In an ideal version of such a system you have no false positives and false negatives. But that idealized version of that system (the one that perfectly classifies fraudulent transactions and non-fraudulent transactions) is static. It can't adapt to cases of fraud that it hasn't seen yet. Eventually a fraudulent transaction gets through.

And that transaction if not detected timely but after the fact (so now there is some fraud) will result in an update to the fraud detection system (probably it will need more than one example to be able to generalize from). Now the perfect system may start to generate false positives or false negatives on other transactions.

So that's why all of this is relevant. I hope I'm able to explain it clearly enough.

The difference is that in big tech, you can measure it in the first place. Are you really suggesting that that human-to-human systems have always had less fraud? Of course not, the fraud just wasn't logged and reported.

“Big tech” is very far from the only sector where transactions can’t all be verified in person. The financial sector is one obvious case.

Zelle wouldn't help fraud victims at all. Most other payment systems have some recourse.

A big portion of them happening now thanks to chatgpt.

For example, my partner posted an item for sale in FB marketplace.

The buyer said she couldnt pick up item, but her brother would. She could pay via Zelle, all she needed was an email & phone # . None of that seemed weird, so my partner agreed.

The buyer then said she sent a Zelle payment. My partner got an email from "Zelle Pay" saying money was pending due to my partners account not being a business account.

Luckily, we know zelle and didnt fall for it. The sender was a Gmail account.

My partner must have been talking with a bot.

5 min later, another buyer showed up. She also could not pick up but her brother would. She was to pay via zelle.

Be careful with FB marketplace. It's a mess now.

>Be careful with FB marketplace. It's a mess now.

Now? I think you've missed that by a bit which is understated in the same manner your "now" is.

Yet it is still miles better than the previous state of the art, craigslist.

If your better is still bad, you're not good

It's Log, it's log, it's better than bad, it's good. From Whammo! (Also brought to you be Zelle)

How is a platform that consists of bots and scammers any better?

I don't know about you, but it's fairly easy to see if someone real is behind Facebook profile vs someone running a scam. When I buy or sell on marketplace it's local and if we don't have a friend in common or a friends of a friend, or an open profile that looks real there is little time wasted.

In contrast, in Craigslist-land I'm interacting with just a phone number or an email.

Its really not. Cl still has more legit and timely ads.

My easy way through this is to put in the listing that the exchange is cash only and to be done at the local police parking lot where it’s monitored. As soon as I started doing this all the BS stopped and I only get more serious offers. It is harder to sell, but I’ll take that over the scams.

The local police parking lot trick is not always guaranteed to work. Meet inside the police building at least.

I did this a few years ago to sell a PS5 in the outskirts of Metro Detroit.

We were in communication with the possible buyers and saw them turn into the lot. As soon as we asked them to meet us inside they got cagey, hung up, and just left.

Fair enough on that point. I don't live in a particularly sketchy area. I think it probably depends on how popular/in-demand the item is as well. A PS5 is one of those items that was super hot back a few years ago when it came out, so it would probably attract a lot of people willing to do anything to get one.

That scam predates ChatGPT by a lot, it's not necessarily AI driven.

It had nothing to do with ChatGPT, if anything ChatGPT would have let them come up with more unique messages

> None of that seemed weird

In my experience, in a FB marketplace transaction where the buyer picks up the item, the buyer only pays after personally inspecting the item and (often) haggling a bit.

Prepaying using Zelle for an unseen item is very weird.

Yeah. If you're picking up the item in person, you can bring cash.

It has been like this since years. I had the very similar scripted responses in 2019 at craigslist.

There's the exact same scam here in Australia, but using PayID instead of Zelle.

I'm not sure there's a particular reason to think it's a bot or AI is there? It could just be a script and a call-centre type operation.

If a person is physically picking something up, have them pay cash. You just avoid all this kind of crap, including closed accounts and whatever from PayPal and the like.

I've had this exact same experience, the emails are fake but its pretty hard to tell if you aren't savvy. I've also had an anti-scam where someone legit sent me $200 saying it was a mistake and it was for someone else (I have a common seeming email address) and they needed it back because it was for their grandmothers funeral. I said that this sounds like a scam and to contact me in a month to make sure the transfer isn't reversed. I never heard from them again but the $200 stayed in my account.

I'm guessing you haven't sold many things via FB marketplace or craigslist. Anyone offering to pay sight-unseen is a scammer. Just report and delete the chat. Bots will tend to spam you immediately after you post the listing too.

Anyways, I sold a ton of stuff on FB marketplace before we moved out of our old place, only allowed cash / venmo payments and they had to come pick it up

Yes. VISA and MC are at many orders of magnitude above that in an absolute sense.

Yes, and they have mechanisms for disputing fraudulent transactions with a method for restitution if the transaction is a scam.

And Zelle did nothing. Now they might start

By design. It was specifically noted in a lot of the internal presentations and such leading up to launch that one of the goals with Zelle was shifting the nexus of liability away from the banks.

because by law they are liable (over $50)

The flip side is that zelle has always been equivalent to handing someone cash. You wouldn't expect to get your cash back after you handed it to a scammer in real life. But since zelle feels like a credit card transaction, people expect there to be safeguards built in, despite being told all along that once you send the money it's gone.

It's like the people who used to abuse the friends/family policy on paypal to cut out paypals fees and then were surprised when they had no buyer/seller protection, when they had to click through several messages specifically telling them that.