Why do government agencies and banks fail to track online frauds, though it is always said payments can easily be tracked to a bank account?*

TY for the A2A.

Obviously a comprehensive answer for all types of online frauds can only be provided by the said banks and government agencies but, if I were to take the case of most common type of “online fraud” I’ve heard about, it’s probably not a fraud at all.

Before I explain why, let me take a few situations:

1. Price of a certain item is 225 (in whatever currency) at one outlet of a chain store in one zip code and 265 at another outlet of the same chain store in the adjacent zip code.
2. When order is placed on ecommerce website, the price of a certain item is 100. On the date of delivery, which is two days away, the price of the same item on the same ecommerce website has dropped to 80.
3. Price of a certain item in a grocery store is 30. Price of the same item in a multiplex is 90.

When faced with these situations, some Buyers in some countries feel cheated and rush to some government agency to seek redressal.

But, the fact is, pricing is between Buyer and Seller, and dynamic and discriminatory pricing of the above nature are legal in most free market economies. So, while these Buyers might feel cheated, no fraud has happened and bank / government agency can’t do much.

Coming back to “online fraud”, the most common type I’ve heard about is where a Victim uses an Account-to-Account Real Time Payment (A2A RTP) like Zelle (USA), FPS (UK) or UPI (India) to pay the Perpetrator for certain goods or services and, despite making the payment, does not receive the promised goods or services. Then Victim claims fraud and approaches a bank and / or government agency for refund of his payment.

While Victim feels cheated, the fact that he has made the payment to the Perpetrator is strong indication of consent, which undermines the charge of fraud. Even if bank / government agency can track the unintended recipient of the payment via their bank account, it’s not easy to prove fraud and retrieve the money from him or her. In fact, Zelle tells customers on its website clearly that they should not use Zelle to pay anyone they don’t trust.

Ditto misdirected payments via A2A RTPs.

The above is the case with an A2A RTP, which is an Irrevocable type of payment.

JFYI, Credit Card payments are Revocable. Which means, had the Victim in the above situation made the payment via Credit Card, he can raise a dispute with his bank and, in most cases, get the debit entry reversed. Also, the money would not have left his bank account while all this was happening.

In case you’re interested in knowing why A2A RTPs are Irrevocable and Credit Card is Revocable, please see https://qr.ae/TWY1II.

*: This is the original question I answered. I’m repeating it since some of my answers don’t make sense even to me when they’re moved to / merged with some other question that I didn’t answer.