Zelle Payment Scams

An Exploration Of How Banking Has Gone Bad

A SCARS Special Report

What To Know About Zelle Scams And How To Spot Behavioral Red Flags From Scammers

Important:

• Scammers use Zelle and other payment apps because transactions are quick and hard to track.
• If you get scammed on Zelle, it will be difficult to get your money back.
• Use Zelle only for family and friends, and make sure to implement caution toward people you don’t know.

Scammers are now turning to peer-to-peer (P2p) payment networks like Zelle to con people out of their money

Here’s what you should know about Zelle scams, so you can protect yourself while using the payment app.

HOW ZELLE SCAMS WORK

A scam occurs when is person or company tries to deceive you into directly giving them money or sharing personal information so they can access it.

Scammers take advantage of new payment technologies as they emerge, and scammers have now moved onto Zelle and other payment apps for three main reasons:

• Money sent through payment apps is available quickly after being sent.
• The money is difficult to get back due to regulation.
• Scammers can remain out of reach of law enforcement by setting up dummy accounts or using other tactics.

THE BIG PROBLEM – ZELLE POLICIES

Zelle works differently from other Peer to Peer (P2P) payment apps because it’s partnered with credit unions and banks. You’ll also have to use your bank’s mobile app or online banking platform to make a payment. This is both good and bad.

For many consumers, that creates an impression, incorrectly, that the same kind of protections they get for other transfers through their bank, they’re going to get on Zelle. That’s not true.

PAYMENTS ON ZELLE SHOULD BE TREATED LIKE SENDING CASH

Zelle does not offer a protection program for authorized payments. Once you authorize a payment to be sent with Zelle, you cannot cancel it if the recipient is already enrolled because money is going directly into that recipient’s bank account within minutes.

As a result, when you have fallen for a scam, the Zelle website says you must contact your financial institution.

HOW BANKS VIEW ZELLE TRANSFERS & SCAMS

Reporting fraud allows your financial institution to review your situation and freeze accounts if necessary. However, it’s unlikely you’ll get your money back.

We hear very often from consumers is they do the right thing — they report the crime first to their local police to obtain a report number, then call their bank. They report it but the bank says that there’s nothing they can do. But the truth is that is not really true, they CHOOSE to do nothing.

Banks will refer to Regulation E, also known as the Electronic Funds Transfers Act, which covers customer protections regarding money transfers — but only for unauthorized transactions. If you willingly hit send, it will usually be considered an authorized transaction. You likely won’t get your money back.

If someone hacked into your account and took your money, you are protected under the law. You should report it to your bank that it was an unauthorized charge and that they should reverse it. The worst that will happen is that they will refuse to refund your money.

AVOIDING ZELLE SCAMS

4 behavioral red flags typical of Zelle scammers

Scammers may try to fool you by using skillful tactics, but be mindful of these four red flags if you’re sending money to someone you don’t know:

1. A person insisting on being paid only through a payment app
2. A person tries to rush you into making a quick payment
3. A person telling you that your account has been hacked and you need to share information
4. A bank calls you and tells you to send money through Zelle

In these situations, it’s best to pause contact or hang up the call to determine whether the information you’re receiving is correct – usually by checking with your bank on their official phone number (as for their fraud department).

ZELLE SCAMS TARGETING BANK CUSTOMERS (BANK OF AMERICA/WELLS FARGO/CITIBANK/OTHERS)

In addition to the above, there are specific scams targeting bank customers that use Selle. Here are the steps that these criminals follow to empty your bank account.

STEP 1. FAKE TEXT MESSAGES OR EMAILS FROM A BANK

Scammers impersonate banks such as the Bank of America or Wells Fargo and send you a fake “security alert” that says you’ve approved a Zelle payment. You’re instructed to reply to the message or phone the provided number if you don’t recognize the payment — which you obviously won’t because it’s fake! Sometimes the scammers will call you directly, too.

STEP 2. PHONE CALLS CLAIMING TO BE FROM YOUR BANK

On the phone call (the caller ID will be spoofed as the bank’s name), a scammer will pose as a bank employee and inform you that the email you received means your bank account has been compromised. To stop you from losing all your money, the fake employee will urge you to use Zelle to transfer all your money to your own personal Zelle account.

STEP 3. LOSING ALL YOUR MONEY

The scammers then guide you step-by-step into making a Zelle transaction — to a Zelle account you’re lead to believe is your own. However, although the Zelle account is in your name, it is actually controlled by the scammers and any money sent to this account will go straight into their pockets.

USING ZELLE SAFELY

The State of Castorina recommends Zelle should only be used for people you know and trust. If you’re using a Zelle to send money to someone you don’t know, it’s best to be cautious. Actually, you should never send ANY money to people you do not know!

Here are a few tips on how to use Zelle and other payments safely:

1. Verify you have the right account
   Send a small amount of money first and ask the person to make sure they received it
   Use only home Wi-Fi or your cellular connection to avoid security gaps in public Wi-Fi
   Be mindful of what you share on social media, so scammers don’t know details about your personal life
   Sign up for alerts or multi-factor authentication for extra security
2. Where to report Zelle scams
   If you’ve fallen for a scam on Zelle or another payment app, always report the crime – see below.

People don’t like to admit that they’ve been a victim of these crimes because they fear they will be blamed for it. And they often blame themselves. While reporting it may not result in you getting your money back, what it does is help law enforcement, identify trends, and help protect other consumers. But, without reporting it the bank will do nothing.

HOW TO PROTECT YOURSELF FROM ZELLE SCAMS

• Double-check the sender’s mobile number/email address. Take note of caller ID, but be aware that it can be spoofed!
• Be extra wary if a potential buyer insists on using Zelle or another online payment app.
• Turn to the bank’s official website to confirm any details regarding any security alerts.
• Click here to report a fraud or scam to Zelle.
• Think twice before you make any payments through Zelle. Zelle suggests that you only use it with friends and family to better protect against scams.
• According to Zelle, if you “authorized” a payment, you may not be able to get your money back.
• NEVER click links or attachments from unknown sources.

REPORTING ZELLE SCAMS

It’s recommended to report your scam to take the following steps:

Do the first two steps immediately, first to your local police and get a report number, then to your bank.

REPORT TO LAW ENFORCEMENT

You must file a local police report on the scam/crime with your local police. Be sure to get a police report number and the name and contact information of the fraud detective assigned to the case. In most circumstances, there will be a division dedicated to reporting and investigating fraud.

Law enforcement will also report this information to your state attorney general. The state attorney general can review your report to identify illegal activity and if there is a case for prosecution and money recovery – prosecutors pay an important role in retrieving money when possible.

CONTACT YOUR BANK

The second thing to do quickly after discovering the scam is call your bank or credit union. Your financial institution can investigate the situation further and freeze bank accounts if you’ve been hacked or had unauthorized access to your account. You may also request that the money be returned. Although, it’s unlikely you’ll get your money back – but it depends on the speed of reporting and the specific circumstances.

ADDITIONAL REPORTING RESOURCES

You may refer to the following government agencies to file additional reports or learn more about your rights:

• Consumer Financial Protection Bureau: The Consumer Financial Protection Bureau has educational resources on many topics involving scams. For example, you can learn about elder financial exploitation and phishing. https://www.consumerfinance.gov/complaint/
• Federal Trade Commission: You should always file a report with the Federal Trade Commission. Reports are shared with 3,000 law enforcers throughout the US. Always use this link fr increased attention: https://reportfraud.ftc.gov/#/?orgcode=SCARS
• FBI Internet Crime Complaint Center: The FBI Internet Crime Complaint Center looks into all online crimes. You may file a complaint through the center if you or someone you know has fallen for an online scam involving certain types of transactions. www.IC3.gov or 1-800-CALL-FBI
• Federal Reserve: You can also file a complaint against your bank through the Federal Reserve. Such complaints are treated very seriously by the bank and often produce results. Visit here fore more information https://www.federalreserveconsumerhelp.gov

Portions: TrendMicro