The free Zelle payment app is extremely popular because it allows users to transfer funds directly between bank accounts free of charge. But Zelle’s popularity – a collaboration between Capital One, JP Morgan Chase and other leading banks – has also made it a major target for fraud.

Stories of Zelle users losing thousands of dollars in money laundering scams continue make titles.

IN letter of 26 AprilSenator Elizabeth Warren and Robert Menendez, both members of the Senate Banking Committee, asked Zelle’s parent company, Early Warning Services, about “the extent to which Zelle allows fraud to thrive and the steps your company takes to increase protection. consumers and help consumers recover lost funds. “

Read on to learn how Zelle works, how criminals use it to defraud consumers, and what to do if you fall victim to Zelle’s scam.

What is Zelle and how does it work?

Zelle is a peer-to-peer (P2P) payment service created by a consortium of major US banks, including Bank of America, Chase, Capital One and Wells Fargo. He does not charge fees and works with almost 1500 banks and credit unions.

Designed to compete with other electronic payment services such as PayPal, Venmo and Cash App, Zelle allows banks to process random electronic transfers without paying any fees to third parties. Customers whose banks do not support Zelle can link a debit card to the Zelle app.

Last year, people sent $ 490 billion through Zelle, more than twice as much as $ 230 billion to Venmo, The New York Times reported.

Zelle allows users to send money electronically to anyone: All you need is a recipient’s email address or US phone number to transfer funds. The transactions are instantaneous and irreversible after completion, which makes Zelle very attractive to criminals.

What happens when Zelle cheats?

More than reported Zelle scams consist of clean social engineering: manipulating people with fraudulent information and intimidation tactics. Fraudsters use false statements and statements to make people unknowingly allow remittances.

A common scam involves an email or text message asking the user to confirm a large, counterfeit Zelle payment. When the user replies that he has not authorized the transfer, the fraudster makes a phone call, pretending to represent the bank and falsifying the phone number of the financial institution. They translate the caller through false instructions on how to cancel unauthorized claims, which instead actually transfer money to criminals.

Another popular scam begins with a message claiming that your bank account has been compromised and that you need to take immediate action to resolve the issue. If you answer, fraudsters follow a phone call, pretending to be your bank and directing you through the money transfer process.

Along with disguising your bank, fraudsters can also pose as institutions such as utilities. A woman in Lorraine, Ohio is facing threats to interrupt the service from someone posing as her electricity company, who then demanded payment from Zelle to keep the power.

Former Major League Baseball baseball Keith Hernandez has come across almost the same utility scam. He was targeted by a fraudster who claimed to represent Florida Power & Light:

How can I protect myself from Zelle scams?

Since most Zelle scams are socially designed, there are specific steps you can take to avoid them.

Do not reply to unsolicited text messages or emails.
This advice applies to all alleged fraud, not just those involving Zelle. If you receive a message that it is from your bank, but you did not contact them first, do not respond. Instead, call your financial institution directly to inquire about your account and any security issues.

Assuming there are no problems with your account, you can also inform your bank that you have been phished. If you have provided any personal information due to phishing attempts, you may work with your bank to protect your account.

Watch for “urgent” deadlines or requests from new recipients.
If someone says you need to act immediately to solve a financial problem, the alarms should start ringing. Fraudsters use tactics of intimidation and a sense of urgency to make you panic and less likely to think critically. With the utility frauds in the section above, users were told they only had 30 minutes to act before their power was turned off.

If you notice any suspicious behavior by someone who claims to be your bank, utility, or other organization that wants immediate payment, immediately hang up and call the business directly.

Also be alerted to requests from banks, companies or utilities for new Zelle payments, especially if you have never paid them through Zelle before. If you receive any payment requests with Zelle, contact the organization directly through their official website or phone number for more information.

Never give anyone your two-factor authentication password.
Also known as multi-factor authentication, 2-factor authentication (2FA) adds an extra layer of security to your accounts. Each time you log in to your account, you’ll receive an additional one-time password, usually delivered by email or text message, that lasts 30 to 60 seconds.

Once you’ve set up 2FA for your bank accounts, never distribute your one-time passwords to everyone. Criminals posing as your bank or utility company may be pressuring you to tell them your password for many false reasons, but real institutions will never ask you to.

Use Zelle only for transfers to people or companies you know and trust.
If you make a payment with Zelle, you may not be able to get a refund if you were deceived by incorrect authorization of payment. While Zelle provides a convenient and easy payment service, limiting its use to people you know personally will reduce the risk of fraud.

Last year, $ 490 billion was transferred through Zelle.

SOPA images

What should I do if I have been deceived by Zelle’s deception?

First, contact the financial institution that was part of the transaction immediately. This allows the business to start an investigation as soon as possible. Due to the immediate nature of Zelle, you will want to respond quickly.

According to a lot local reports, banks are reluctant to recoup losses from Zelle’s phishing scams because the transactions were actually approved by account holders. A few money was returned to recent victims only after the news of their fraud puts pressure on the banks to do so.

In June 2021, The Consumer Financial Protection Bureau clarified its position on the compliance required by banks with Electronic Funds Transfer Act, 1978also known as Regulation E. The CFPB states that “if a third party fraudulently incites a user to share account access information”, that user should receive the same protection as if the money had been acquired from a stolen debit card or other bank ” access device. “

EFTA also includes a great reason to report your Zelle scam immediately. The law requires consumers to notify their banks of a loss or theft within two business days in order to receive full protection.

Keep in mind that the CFPB guidelines only protect consumers who are unknowingly tricked into transferring money.

If your bank refuses to reimburse you for Zelle’s fraud costs, your only way (other than broadcasting your story to local media) is to file a complaint with the CFPB.

For more information on fraud protection, see the best services for protection and surveillance against identity theft and learn about growing fraud on social media.

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