Angela Beltran Auto 09.27.2022 05:Sep AM EDT

Here's What You Need to Know About Zelle Scams

Opportunities come in from every corner and scammers are keeping watch on every one of them, so when they hear about quick and irreversible payment methods, they will jump at the chance.

In the situation enters Zelle, a peer-to-peer payment service that's the top concern in the Annual oversight of the Nation's Largest Banks hearing.

It seems that scammers have been using Zelle as a channel for conning people into paying them by manipulating people using scare tactics and fraudulent information, as per CNET's article.

Zelle is owned by a group of major US banks including Bank of America, Chase, Capital One, and Wells Fargo. The payment service was launched in June 2017 and was meant to compete with other e-payment services like PayPal, Venmo, and Cash App.

One of the selling points of Zelle is that there are no fees and it works with around 1,700 banks and credit unions. Approximately $490 billion dollars have been sent through Zelle in 2021 so when you hear associations of fraud next to that amount, concerns should definitely arise.

How Are People Being Scammed Through Zelle?

In reported Zelle scams, the users are being conned using false claims and representation to get them to authorize payments or money transfers.

One of the most common scams according to CNET involves text messages or emails asking for its users to confirm a large amount of money as payment through Zelle. Users will immediately say that they won't authorize the transfer which then prompts a caller pretending to be a bank representative and spoofs the financial institution's phone number.

The scammer will then tell the users to transfer a certain fee to reverse the transaction which the user will do so in a panic thinking about the large sum of money they would lose if they don't pay the smaller fee to stop the transaction.

In some instances, they could pretend to be a utility company calling with threats of disconnection. Denise Traylor, a woman from Lorain, Ohio received a call from her supposed electric company claiming that someone will disconnect her power in 30 minutes if she doesn't handle her disconnection notice that day.

The caller knew Denise's previous account statements and address which made it sound like they were the real deal. When Traylor paid the first time, the caller claimed that the payment did not come through. She went through six attempts as the fraudster instructed, not knowing all her attempts were actually successful, costing her $1,200, as stated by News 5 Cleveland.

How Did The Banks That Owned Zelle Respond?

Zelle released a statement claiming that 99.9% of its transactions were sent with no reports of scams or fraud, but media like the local news and YouTube content creators caught wind of the situation which put the Banks that owned Zelle in a tight spot.

Though the banks were reluctant to reimburse the victims of fraud at first, they did return the money of recent victims to keep the heat of the media off of them.

If your bank refuses to reimburse the money you lost in a Zelle phishing scam, you may file a complaint with the CFPB, but do note that they only help consumers who were tricked into the payments.