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You might have come across or already been accustomed to the peer-to-peer money transfer application called Zelle. It is as popular as Venmo – if not more – when it comes to online transfers due to its easy-to-use interface.
You can easily transfer money from one bank account to another using Zelle. But you can also get scammed just as easily on the app. Therefore, it’s vital to stay current with the rising scams on the platform and learn how to protect yourself.
In this article, we’ll discuss what Zelle is, how scammers operate on the app, the types of scams on the rise, how to protect your funds, and much more! So, let’s put our thinking caps on and dive right into it!
What is Zelle, how does it work, and who can use it?
As mentioned, Zelle is a peer-to-peer money transfer application that enables you to conveniently and quickly send money from your bank account or credit card. The only prerequisite is the recipient’s email address or phone number.
Created in 2017, Zelle is now offered as a service by numerous credit unions and banks. In addition to its easy-to-use interface, Zelle is also known for the speed at which it transfers your money. This speed is uncommon in other, more traditional transfer options, such as wire transfers.
However, since there are practically zero delays in transfers, there’s also no way to stop or cancel them once you’ve sent someone money. Zelle doesn’t require you to keep your money in a different account with the service. Instead, it works with debit cards and bank accounts to move money between bank accounts.
Anyone can use Zelle if they have a bank account at one of the participating banks, and you can register with Zelle mobile if you have a Mastercard and Visa debit card. One of the parties receiving and sending money needs to have access to Zelle to transfer funds. However, remember that Zelle is only available in the US, and you’ll have to use your bank for international transfers.
Delving into the world of Zelle scams: The whats, whys, and hows
Zelle scams involve at least two service users, typically starting when you respond to a payment request from your account to another. The scam ends with the receiving party disappearing with your money and failing to deliver whatever was promised.
Frauds and scams are different. Frauds involve cybercriminals gaining unauthorized access to your account, whereas a scam is when you’re tricked into approving a payment or a transfer. Scammers use tactics to convince their victims to send them money.
Their stories may sound realistic, but they’re only created to make you believe them and fall for their traps. There’s always an emotional element attached to their tactics with a hint of truth. Here are some examples:
- Fear: They might pose as representatives from the Internal Revenue Service [IRS] and contact you regarding outstanding taxes.
- Compassion: Scammers pretend to be the victims’ friends/relatives in a financial bind.
- Excitement: Lotteries, prizes, surprise jackpots; these are a few offers you may receive from your scammer.
Can you get scammed on Zelle: Real-life examples and stats
A man from San Francisco reported a Zelle scam claiming the scammers had his complete banking information, which tricked him into falling into their traps. Unfortunately, he lost $3,500 instantly and wasn’t offered reimbursement from his bank – despite it being one of the seven banks that own Zelle.
Sadly, this man’s story is not an isolated one. While banks typically refund credit card payments and cash withdrawals, Zelle payments are usually never refunded.
According to a 2022 CNN Business report, 90% of scam payments on Zelle are never repaid by banks. And in 2021, Zelle users lost approximately $440 million to scammers and fraudsters. So, can you get scammed on Zelle? User reports and stats prove it’s as likely as on any other platform.
Reasons behind the surge in Zelle scams
It didn’t take Zelle long to become the most popular peer-to-peer payment app worldwide. And that alone could explain why there’s been an influx of scams on the platform. However, some specific factors make Zelle users a prime target for scammers.
Source: BBB 2022 Online Purchase Scams Report
Banks aren’t liable for any unauthorized transfers on Zelle
It wasn’t until recently that consumers received some fraud protections on third-party online banking applications for unauthorized or fraudulent transfers. Furthermore, Regulation E, issued under the Electronic Fund Transfer Act [EFTA], offered little support for victims forced to make misguided transactions.
However, in June 2021, Consumer Financial Protection Bureau [CFPB] stated that consumers conned into sharing their account details should have the same level of consumer protection as those who fall victim to stolen debit cards or banking devices.
The app connects to your debit card or bank account
Unlike some competitors, Zelle’s owner is Early Warning Services [EWS], a fintech company operated by seven of the largest banks in the US. These banks include JPMorgan Chase, Wells Fargo, and Bank of America.
You only require to tap on a few options on the integrated interface on your bank’s mobile app. And if your bank doesn’t have the Zelle integration, you can easily transfer funds using the Zelle app by connecting your Mastercard or Visa debit card.
The transfers via Zelle are irreversible and instant
If you’re transferring funds to another Zelle user, you can’t cancel the payments. Moreover, like Cash App or Venmo, Zelle was created to transfer money between friends and family – not unknown users. It’s also why Zelle utilizes the Automated Clearing House [ACH] payments system to facilitate transactions.
What you need to know about the 14 popular Zelle scams
Scammers and fraudsters on Zelle are getting more sophisticated each day, finding new ways to deceive their victims. However, their tactics remain more or less similar – if not the same. Let’s take a look at some Zelle scams gaining popularity in recent years:
- Fake rentals on Craigslist
Craigslist is another platform where scams are quite widespread. Two of the most common scams there are rental and overpayment scams. And a lady living in one of Denver’s most desirable neighborhoods witnessed such a scam firsthand.
An elderly couple knocked on her door and told her they were there to view her duplex, which they found on a listing on Craigslist. They had already signed a fake leave and paid a hefty security deposit.
Since Zelle and other similar peer-to-peer payment apps offer swift, irreversible payments, they’re an attractive option for scammers. Therefore, it’s recommended you always double-check listings before making any payments.
Another online retail scam is an overpayment scam, where buyers send you a cashier’s or certified check with an amount exceeding the sale price. The buyer then convinces you to wire back the exceeded amount. You lose your sale item and the overpaid amount when you realize you’ve received a counterfeit check.
- Goods and services scams
People often use Zelle to pay for their online shopping sprees, only to never receive the goods or services they paid for. You’ll likely find an item at a too-good-to-be-true price, which will only be offered if you pay within the small window.
If you see such a product and the seller convinces you to pay via Zelle, think twice before transferring your money to them.
- Recovery and refund scams
If someone has recently scammed you, then others will know that you’re in desperate need of getting your funds back. They use this knowledge to trick you into paying fake recovery and refund service fees.
One such incident happened with a man from Kansas who received a fake call from someone posing to be from a US bank regarding a fake $2,500 refund. But he wasn’t alone. Several Zelle users have reported receiving a call regarding a fraudulent transaction.
- Lottery scams
The lottery scam starts with a scammer contacting you via text messages or emails, informing you of a prize or lottery you’ve won. They pretend to be from a company offering a prize or a lottery company.
The message will likely contain a link where you’ll be asked to claim your price. Once you open this link, you can enter your Zelle account details for the winnings. Similar to fake invoice scams, lottery scams end up with you losing access to your Zelle account, which scammers will then control.
- The Facebook Marketplace scams
Zelle scams are also quite common on Facebook Marketplace, where they target buyers and trick them into sharing their email addresses or phone numbers. The scammers will likely contact you within a few hours of you sharing a listing on the platform.
They will pose as senior citizens who don’t know much about technology and ask you for your Zelle details for payment. Once you share this information, you’ll receive a phishing email or a phone call. These emails contain a similar domain to Zelle’s and prompt you to upgrade to a Zelle business account and pay through a link.
One victim of a Zelle-rated Facebook Marketplace scam reported he was selling a mattress to make room for his new baby on the way when scammers tried to trick him. Luckily, he noticed that the email was fake.
- Fake invoice scams
These scams involve victims receiving emails or texts from businesses they know and trust. The email will contain a fake invoice, and if you click on this invoice, it’ll take you to a spoofed website closely matching the original business website.
If you make the mistake of trusting the website and entering your details and Zelle account information, scammers will gain access to your account.
- Account takeover fraud [ATO]
This type of fraud involves a scammer who gains access to your Zelle account and locks you out by changing your password. ATOs follow the same tactics of smishing, spoofing, or phishing scams. You’re lured to click on a fake login link, which leaks your data to scammers.
After locking you out of your profile, the scammers will go on what looks like a shopping spree using your account – which will still be linked to your bank.
- Romance scam
Catfishing or romance scams are quite common on all platforms, especially the ones dealing with your finances and funds. On Zelle, these scams are reported to be some of the most common ones.
According to the Federal Trade Commission [FTC], almost 70,000 reports were filed regarding a romance scam in 2022, taking the total accumulated losses to a whopping $1.3 billion. The median loss reported came to $4,400 per person.
Romance scams begin with fake dating profiles on popular social media platforms, where people exchange messages with fraudsters. The scammers then charm victims into trusting and falling in love with them. After that, they ask the victims for presents or money – often through Zelle.
- Bank impersonator scams
Another form of a phishing scam, known as smishing, involves scammers sending text messages pretending to be from trusted companies, such as banks. These scams use similar tactics to the ones used in spoofing or phishing schemes.
Most smishing messages inform victims of a suspicious purchase or a suspicious login. They also typically contain a link or ask you to respond on the message thread. Once you respond, you’re contacted by a phony bank representative via phone call.
A woman from California replied to one such smishing scam and was tricked into transferring $1,000 to a spoofed Zelle account in her name.
- Impersonation scams
Impersonation scams are more widespread than you’d think. They involve scammers reaching out to their victims via messages, emails, or even calls, pretending to be one of the victims’ friends or relatives.
They convince their victims to send money by informing them of a fake emergency requiring money. Other times, they’ll represent a company or your bank and use fear-mongering tactics to extort your money.
- Fake account upgrades
Spoofing is another phishing scam that involves scammers impersonating a company to steal money after installing malware on your device. Victims of such scams often don’t realize that Zelle doesn’t ask for payments or upgrades via phone calls or emails.
They also fail to spot that the email they received isn’t from an official domain. Such spoofing emails often contain grammatical errors and try to enforce a sense of urgency.
- The puppy scam
Several scammers lure their victims with ads for puppies or other pets for sale. Often they demand a fee before a meeting with the pet you want to buy and run away with your money. And a woman fell for a similar scam, losing $4,000 to their scammer.
The scammer, portraying himself as a breeder, asked the victim for payment on Zelle. After the first $958, she was asked for another $958 fee for the puppy’s safe arrival. The total for the puppy, shipping, and special crate came to $4,000.
- Self-transfer scams
This Zelle scam tricks victims into believing they’re canceling fraudulent charges and transferring the money to themselves. Instead, the money ends up in the scammers’ hands.
This scam begins with victims receiving a call from a scammer pretending to be from Zelle. They ask victims to share their account authentication codes. When the victims attempt to “reverse unauthorized payments,” the money goes straight to a spoofed Zelle account.
In 2021, a woman from Illinois lost $3,500 to scammers when they called her, posing as her bank. She reported that even her caller ID showed “Bank of America.” Spoofed caller IDs are one of the primary reasons victims believe the perpetrators.
- Money mule scams
If you ever see a lucrative work-from-home job posting online, think twice before applying. Because if you apply for a fake job, you may be contacted via text message, Telegram, Messenger, or Skype by a scammer pretending to be the hiring manager.
The scammer will then extend an offer but ask you to deposit or transfer money, typically to purchase work equipment. Once you pay the amount, the “hiring manager” will vanish.
A woman from California fell for such a scam and lost $1,900 before she realized she was getting scammed.
Shield your funds: Foolproof methods to protect yourself from Zelle scams
If you want to safeguard your funds on Zelle, it’s best to only exchange money with people you trust. However, you may need to use it sometimes to send payments to strangers. In that case, the following are some tried-and-tested methods of protecting your
- Use a VPN service: A Virtual Private Network [VPN], such as PureVPN, is designed to offer you online protection every second that you’re online. It offers protection and privacy features, such as 256-bit AES protection, no logs policy, an internet kill switch, and multi-device capabilities to ensure all your funds and information on Zelle are safe.
- Use a non-bank, peer-to-peer app: While Zelle offers fee-less transfers, you can consider switching to a non-bank, peer-to-peer app, which would be much safer. For example, Venmo allows payments with a connected credit card at a 3% fee. And the recovery process with a credit card company is much simpler.
- Double-check payment requests: Since you can’t cancel a payment on Zelle, you must double-check to whom you’re sending the payment. You can do this by sending $1 as a test transfer.
- Evaluate your bank statements and credit report: Your financial accounts may be of interest to scammers. So, check your bank statement for strange charges or other dubious activities on your credit report to spot signs of identity theft.
- Question the urgency of payment requests: Scammers lure their victims with fear-mongering tactics and create a sense of urgency. Always verify such requests before hastily making the transfers.
- Spot social engineering signs: A scammer may attempt to build trust and establish rapport with you. Question those trying to be overly romantic, dramatic, or friendly with you.
- Enable two-factor authentication [2FA]: Scammers may find it more difficult to breach your account if you set up 2FA, which requires text messages and computer authentications. You must always keep the 2FA codes private.
- Transfer funds via Zelle email: If you’re sending payment to someone other than your friends and family, make your transfers with an email connected to Zelle.
Fighting back: What to do if you’ve been scammed
Are you one of the victims of Zelle scams? Here are a few things you can do next:
- If your credit union or financial institution denies compensation or redressal, file a complaint with CFPB.
- File a report with the FBI’s Internet Crime Complaint Center.
- Contact the bank’s fraud department for unauthorized transactions via a participating bank.
- If you directly made an account on Zelle, contact their support team at 1-844-428-8542 or visit the official website to report a scam.
Will Zelle give me a refund if I’m scammed?
Since Zelle is designed to be used between people who know and trust each other, the money directly goes into the recipient’s account with little to no protection for scam victims. While fraud victims are more likely to get some compensation, scam victims are usually left with no hope.
Unlike PayPal, Zelle doesn’t offer protection from fraudulent transactions. Therefore, you must never use Zelle and similar services for commercial transactions.
You may receive your money back if you report it instantly. However, many banks claim that the Electronic Transfer Act does not apply to numerous Zelle scam victims. You’ll only be directed to your Bank by Zelle, directed back to Zelle by your bank, and the cycle may continue for a long time.
Can hackers take over your bank account through Zelle?
According to the Chief Marketing Officer at Clarify Capital, Nishank Khanna, “Zelle is safe because it uses data encryption which offers users increased protection. From a privacy perspective, it’s safer than alternatives, like Venmo and Cash App, since it’s harder for scammers to access users’ personal information.”
Since Zelle’s roots are deeply integrated into some of the largest banks in the US, it’s quite safe from fraudsters and hackers. Most scams on the platform involve perpetrators convincing victims to share their account information or transfer money.
The key takeaway
Zelle offers a fast, free, and easy method of sending money to people you trust. However, if you’re using it to buy or sell products online, you may be at risk of falling victim to scammers. Therefore, you must keep yourself updated with the latest Zelle scams, learn how to protect yourself, and use a VPN.
PureVPN offers 256-bit AES encryption to hide your online activities, internet traffic, and data. It hides your real IP address so scammers can’t know where you’re using Zelle from, and it offers a no-logs policy that prevents even the VPN itself from tracking and monitoring your online activities.
You can use PureVPN on ten devices simultaneously, safeguarding your devices and Zelle account no matter which operating system you’re on. Try it today and enjoy a 31-day money-back guarantee.
Frequently asked questions
Zelle is a safe option for those who only use its services to transfer money to friends and relatives. If you’re looking for a service that supports commercial transfers or payments for online shopping, it’s best to find another alternative.
Scammers typically only provide you with a single payment option; in this case, it would be Zelle. They will either use fear-mongering tactics to convince you to pay a due or lure you with fake account updates or recoveries.
They will also ask for your Zelle account details or personal information. If you doubt that someone is trying to scam you, question everything and try to only make transfers to friends and relatives.
Some of the most common Zelle scams are phishing, smishing, and spoofing. However, the tactics scammers use differ. For example, they might contact you posing as a company/bank representative, your friend/relative, or send you fake invoices or payment cancellation messages.
While you can receive and send money to strangers on Zelle, consider other, more secure services for such transactions. Zelle was explicitly designed for transfers between friends, relatives, and people you trust. Therefore, it’s best to avoid receiving payments from strangers.
While Zelle transfers are authenticated through your bank, it doesn’t offer the same protections as debit and credit cards. If you’re a victim of fraud, where a cybercriminal steals your account information, you may be able to receive a refund. However, you may not be compensated if you’re a scam victim tricked into authorizing transfers.
PureVPN
April 11, 2023
1 year ago
