Customers keep getting scammed through Zelle

The complaints from customers have spurred two Democratic senators, Elizabeth Warren of Massachusetts and Robert Menendez of New Jersey, to write a letter to Early Warning Services (EWS), Zelle’s parent company, telling the firm that it and banks need to provide ‘appropriate redress to defrauded customers.’

Zelle is an app created by EWS, which is owned by seven of America’s biggest banks: Bank of America, BB&T (now Truist), Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo. Hundreds of banks and credit unions across the US offer Zelle.

The Consumer Financial Protection Bureau considers these fraudulent money transfers to be covered by a federal law, Regulation E, which means that the consumers should be getting their money back.

Many banks have been refusing to reimburse customers defrauded through Zelle, arguing that the customers themselves approved the transfers.

To access bank customer’s money, thieves often impersonate the customer’s bank in a phone call or text – with the bank’s phone number spoofed so that the communication looks like it is from a bank official.

In one common scenario, the customer receives a text that looks like it’s coming from the bank asking if a payment had been made with Zelle. The customer texts no. Then there’s a phone call from a person impersonating a bank official who asks about another transaction. While on the phone, with the phony bank official, the customer receives another text asking if they authorised a different payment via Zelle and provides a six-digit code. The phony bank representative then tells the customer to log into their account and provide the six-digit code to reverse the transaction – but by typing in the code, the customer is authorising it instead.