Zelle users are finding out the hard way there’s no fraud protection

ronjor · Feb 17, 2018

by Sarah Perez (@sarahintampa)

Scammers have taken to Zelle, the Venmo alternative backed by U.S. banks, to defraud consumers who believe the service includes the same protections they’ve come to expect from PayPal. A number of customers report having lost hundreds, or even thousands of dollars, over Zelle, when they used it for transactions with people they didn’t know – like tickets bought off a Craigslist posting, for example.
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ronjor · Feb 28, 2018

FTC reaches settlement with PayPal over "misleading" Venmo practices

By Rob Thubron on Feb 28, 2018, 6:09 AM
The app's transfer, security, and privacy policies were found lacking
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guest · Apr 26, 2019

Zelle fraudsters find new victim pool: Consumers who don’t even use Zelle
April 22, 2019
https://bobsullivan.net/cybercrime/...ictim-pool-consumers-who-dont-even-use-zelle/

Milt Tipperman had never heard of Zelle before April 18, but he learned about the P2P payment app quickly when 8 fraudulent Zelle transactions drained $800 from him checking account.
“I have never used or even heard of Zelle before. I have never used my cell phone to do banking …They apparently provide a service to people who choose to use their service, but for everyone else who do not use their service, they are a threat.”

It appears criminals have found a way to open Zelle accounts attached to consumers’ existing bank accounts and then send money to themselves.
In Tipperman’s case, criminals completed 8 transactions sent to three different recipients.
It’s not hard to find similar-sounding complaints online, several from around the same time period as Tipperman.

“Our online banking was compromised and money was moved via Zelle. We were told this was our doing. We are victims and are being treated as crooks. Legal action might be necessary,” wrote Eric Beckerle on Twitter on April 18. Beckerle confirmed to me later that his request for a refund had been denied.
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guest · Jun 12, 2019

Instant fraud: Consumers see funds disappear in Zelle account scam
June 12, 2019
https://www.nbcnews.com/business/co...e-funds-disappear-zelle-account-scam-n1015736

"They wanted me to verify my identity through a text code. So they sent me a text, and then I read the six numbers back," said Rausch, 30, of Columbus, Ohio.
That was all it took, she said, for the fraudsters to create a Zelle account in her name and gain access to both her checking and savings accounts — all within hours of their phone call.

Her case is hardly unique. NBC News talked to several consumers who said hackers stole anywhere from $190 to $6,400 from their bank accounts using Zelle.
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mirimir · Jun 12, 2019

To my knowledge, banks will *never* request information when calling you.

guest · Aug 26, 2019

Zelle criminal took $23k from elderly victim; BofA (initially) wouldn’t give it back
August 26, 2019
https://bobsullivan.net/cybercrime/...-victim-bofa-initially-wouldnt-give-it-back/?

Zelle hackers recently stole nearly $23,000 from an 86-year-old New Hampshire woman, draining her Bank of America checking and savings accounts, and the bank denied her dispute of the fraudulent charges for months.
Criminals were able to complete eight separate $2,499 withdrawals from the victim’s account — $1 below the daily transfer limit, according to the victim’s son — calling into question the bank’s ability to spot obvious Zelle fraud, he said.

At the time, she was unaware she had access to the Zelle service, her son Michael told the bank. Despite the obvious fraud pattern, Barbara Helmstetter’s disputes of the transactions — her request to get a “refund” of the stolen funds — was denied by the bank in July.
After the family reached out to me, and I contacted Bank of America’s media relations department, the bank reversed its decision and returned $22,900 to the woman.

In a painful irony, Michael and Renee were initially rebuffed by the bank in their efforts to help Michael’s mother because their name wasn’t on her bank accounts. In other words, the bank’s security stopped the victim’s children, but not the criminals.
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guest · May 4, 2020

Zelle Users Continue to be the Target of Scams Intent on Fraud
May 4, 2020
https://blog.knowbe4.com/zelle-users-continue-to-be-the-target-of-scams-intent-on-fraud

The wildly popular payment app is a cybercriminals playground where users are easy prey for money laundering, scams, mules, and just plain old fraud.

We live in a world where yet another new popular app pops up and suddenly everyone is using it. So, it must be safe, right? In a word, never. The Zelle app connects individuals allowing easy payments to be sent right from the user’s bank account. It’s the inherent trust in an app that is the basis for Zell-related fraud.
That doesn’t make Zelle a bad choice; it just means the individual needs to be aware of – and responsible for – what will and won’t happen once they send money to an individual they truly don’t know personally.

Zelle does have protective measures in place such as sending limits and real-time alerts, but ultimately it’s up to the individual to protect their money.
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