Payment apps like Zelle make it easy to transfer funds. Unfortunately, they also make it easy for scammers to get your money. In 2021 alone, users lost an estimated $440 million on peer-to-peer payment systems.
What’s worse, Zelle warns they “can’t help getting your money back”. You can report the fraud to your bank or credit union. But under federal law, you are only required to reimburse money for any unauthorized transactions. If you press “send” on a Zelle payment, the bank considers it an authorized transaction, even if you’re conned into doing so.
To make matters worse, even in cases deemed illegal, only about 10% of victims get their money back.
Zelle and the banks it partners with have come under fire on several occasions. Senator Elizabeth Warren criticized major banks for what she called “the fraud and theft that is rampant in Zelle” and their refusal to refund victims. Legislators are pressuring banks to better protect consumers using Zelle.
But for now, it’s up to you to protect yourself.
General Zelle Scam
This is the most common scam targeting Zelle users.
1. Spoofing Fraud
You get a text, call, or email that looks like it’s from a sender you know — for example, your bank says there’s suspicious activity on your Zelle account. They tell you they need your login information to stop it, ask you to click on a link to verify your account or reset your password, or ask for personal information to confirm your identity.
These scammers use spoofing techniques to make themselves look like someone else. They change their phone number and caller ID or use a misleading email address to trick you into thinking they are reaching from a legitimate company or institution.
2. The Me-to-Me Fraud
Also known as “pay yourself” scams, these are spin-offs of spoofing scams. You get a call or SMS from someone claiming to be your bank. They tell you that someone is trying to make fraudulent payments from your account and you can stop them by transferring money from your Zelle account back to your bank account.
The account they tell you to send the payment to is not your bank account; it’s theirs. You have finally been conned by your desire to stop the scam.
A San Jose, CA woman fell victim to this scam when someone claiming to be her bank called her in the middle of a busy work shift. The fake caller ID said Wells Fargo, Zelle’s payment appeared to be going to an account in her name, and she was overwhelmed and panicked. The caller scammed him out of $3,499 — and then laughed it off when he realized what had happened while still on the phone.
3. Impersonation Fraud
You got a message from someone you know. They tell you they are in a bad situation and need money ASAP. For example, their car breaks down and they are stranded or they are arrested and need bail. Want to help a friend, you send money.
Or, you get a message from a company or institution you know, like your utility company asking for payments that are due or the IRS saying you owe outstanding taxes. Eager to avoid late fees and other penalties, you pay them.
In both cases, the sender is not who they say he is. They play on your emotions to persuade you to send money without taking the time to evaluate the request. Former MLB player and color commentator Keith Hernandez almost fell for this scam, but luckily he eventually realized it was “bullshit”.
4. Facebook Marketplace & Craigslist Scams
You’re browsing Facebook Marketplace or Craigslist when you see a post for an amazing deal, like deeply discounted tickets to a popular concert or a super cheap game console. You really want to grab this offer before someone else does, so you don’t have to think twice when a seller asks you to pay through Zelle.
Since Zelle payments are instantaneous and there are few consumer protections in place, this is an easy way for scammers to get your money and get away.
Another scam that is common on online platforms is rental scams. You see an ad for a home for rent, and when you respond, the poster says they are an out-of-state home owner and you can post a security deposit by Zelle. But the house is not for rent; any walk-through photos or videos you see were most likely pulled from the listing the last time the home sold.
One wise couple in Orange, CA avoided this scam by visiting the home in question first—and learning from the residents that it wasn’t for sale. Others are not so lucky and send payments without asking.
5. Romantic Deception
If you’ve ever watched “Catfish,” you know how this scam goes. You meet someone online, whether on a dating app or a social media network. They quickly draw you into a whirlwind romance, but for some reason, they can never meet in person. Once you fall for them, they beat you up for money for medical emergencies or other needs.
They may or may not be who they say they are, but you would never meet them to find out. They only want your money.
Another popular romance scam involves matching someone on a dating app claiming they need money to get the date you’re planning. They may say they can’t afford gas or need to hire a babysitter for their child. You send money. They never show.
How to Protect Yourself From Zelle Scams
To avoid Zelle scams, take these precautions.
Watch for Red Flags
Signs of a Zelle scam include:
- Unsolicited communication
- Sounds too good to be true
- Tug at your emotions
- Pressure to act immediately
- Sellers who insist you only pay with Zelle
- Strange sender’s email address (for example, firstname.lastname@example.org or email@example.com)
- Weird URLs (for example, www.bankofamerica.com.my/verify)
If you see these signs, stay away.
Don’t Send Money to Strangers
Only send money on Zelle to friends, family and other people you trust. Never use it to buy things from strangers. There is no guarantee that the people you send will give you what you pay for.
If you want to send money digitally for goods or services, use another payment system. Both Venmo and PayPal provide purchase protection.
Make Sure You Know Who You’re Talking To
If you get a request from a company you recognize, double check that it’s really them. Contact the company using the official contact information on its website to verify if the request is valid.
If you get an unexpected request for money from someone you know, don’t assume it’s him. Ask yourself: Are they contacting you in ways they wouldn’t normally use, like social media messages when they normally text? Did they use a different email address, phone number, or username? Does the writing sound like them?
Even if these things come out over and over, contact the person using one of the methods you normally use to ask if they sent you a request. You can’t be too careful.
Do Not Respond to Unsolicited Communications
If a message or call pops up suddenly, there’s a high chance it’s a scam.
If you receive a text or phone call asking for Zelle payments or your Zelle information, don’t give it out. If the sender claims to be a legitimate company, such as your bank, contact the company directly via the “contact us” page on their website.
You can also reduce the number of spam calls you receive by using a call blocking tool.
Beware of Email Links
Never click on links in emails or texts from unknown senders.
Double check the link in the email from a sender you know to make sure it’s not a spoof. If you right-click or hover over a link, you’ll see the URL to go to.
If it looks suspicious, don’t click it. For example, the email might contain a legitimate-looking URL like www.wellsfargo.com. But when you hover over it you see the URL linked by the text is www.wellfargo-verification12345.com.
Antivirus software can also help you identify and avoid unsafe sites.
Use Two-Factor Authentication
Two-factor authentication requires you to provide additional information when you sign in to your online account. For example, you enter your username and password on your bank’s mobile app. Your bank will then send you a temporary code (via SMS, phone call, or email) that you must enter to verify your identity and complete the login process.
Two-factor authentication adds an extra layer of protection to your account. If someone knows your login information, they can’t do anything without a temporary code.
Never Give Anyone Your Login Information
There is no legitimate reason why someone would need your login information. Never give it away, period. And never provide two-factor authentication information.
If you are a victim of Zelle scam, chances are that your money will be lost forever. However, you can contact your bank to inform them of the scam and see if they will refund your money. Otherwise, you can file a complaint with the Consumer Financial Protection Bureau.
You should also report the scam to protect other Zelle users from falling prey to it:
And remember, Zelle transfers are instant. When you press “send”, the money will come out of your account, and the chances of getting it back are slim. So ship with care.