Zelle Fraud – A New Twist on an Old Scam

Zelle is a peer-to-peer payment network similar to Venmo and others. The difference is that Zelle is owned by the big banks like Bank of America, Capital One, Chase, Wells Fargo and others.

But recently Zelle has been in the news and not for good reasons. Scammers have figured out that they can socially engineer many people and once the money is out of your account, it is hard to get back (more on this later).

How can you protect yourself against Zelle scams? Remember those scams that asked you to buy iTunes gift cards, scratch off the cover and send the scammers the numbers? This is not much different.

Don’t use Zelle to send money to people you don’t know. If the scammer tries to convince that things are super urgent, take a deep breath. If someone calls you and the caller ID says it is your bank but they want you to send them money with Zelle, it is, 100 percent, a scam. Hang up. Credit: Channel 3000

Some other tips – and this is no different than any other scam:

  • Don’t respond to unsolicited text or emails
  • Watch for urgent deadlines
  • Always use two factor authentication and never give out your code

The banks have been reluctant to reimburse you for Zelle scams since you did initiate the transaction, but talk to your bank and, if they give you a hard time, talk to your local TV station. Banks love the press saying they have horrible customer service and don’t care about their customers.

But here is the most important thing to “suggest” to your bank. Ask them to look at the Consumer Financial Protection Bureau’s position on banks’ compliance requirements with the Electronic Funds Transfer Act of 1978 known as Reg E. Basically, the feds say, that the banks have to give you bank your money. You may need an attorney to get their attention, but the rules are clear. Credit: CNET

But just to make sure that the banks understand the plan, two US Senators sent a letter to Zelle’s owner, Early Warning Services (which itself is owned by the banks), asking it to explain how it is handling fraud. The outcome of this, likely hearings and either more regulations or laws, means that the banks need to clean up their act before it is forced on them. The banks do not have a popular position in this situation and they will lose in the court of public opinion. Credit: Finextra

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