Definition, how to protect yourself from scammers

  • Scammers use Zelle and other payment apps because transactions are fast and hard to track.
  • If you get scammed on Zelle, it will be difficult to get your money back.
  • Only use Zelle for family and friends, and be sure to exercise caution around people you don’t know.

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

Here’s what you need to know about Zelle scams, so you can protect yourself when using the payment app.

How Zelle Scams Work

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

John Breyault, the National Consumer League’s vice president for public, telecommunications and fraud, says scammers are taking advantage of new payment technologies as they emerge. According to Breyault, scammers have now switched to Zelle and other payment apps for three main reasons:

  • Money sent through payment apps is available soon after it is sent.
  • The money is difficult to recover due to regulations.
  • Scammers can stay out of the reach of law enforcement by creating fake accounts or using other tactics.

Zelle Policy Overview

Zelle works differently than other P2P payment apps because it is associated with

credit unions

and banks. You will also need to use your bank’s mobile app or online banking platform to make a payment.

For many consumers, this gives the mistaken impression that the same kind of protections they get for other transfers through their bank, they will get on Zelle. This is not true, ”said Breyault.

Alexis Castorina, senior director of consumer education at Zelle, says 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 registered, because the money goes directly into that recipient’s bank account within minutes,” says Castorine.

Therefore, when you have fallen for a scam, the Zelle website states that you should contact your financial institution.

How Banks View Zelle Scams

Reporting a scam allows your financial institution to review your situation and freeze accounts if necessary. However, you are unlikely to get your money back.

“What we hear too often from consumers is that they do the right thing – call their bank. They report it. The bank says, ‘Sorry, there’s nothing we can do,'” says Breyault.

Banks will refer to Regulation E, also known as the Electronic Funds Transfer Act, which covers customer protection regarding money transfers, but only for unauthorized transactions. If you voluntarily press send, it will generally be considered an authorized transaction. You probably won’t get your money back.

Lauren Saunders, associate director at the National Consumer Law Center, says if someone hacked into your account and took your money, you’re protected by law.

“You should insist with your bank that this is an unauthorized charge and that they should reverse it,” Saunders says.

How to Avoid Zelle Scams

4 behavioral red flags of scammers

Scammers may try to trick you using slick tactics, but keep these four red flags in mind if you’re sending money to someone you don’t know:

  • A person who insists on being paid only through a payment app
  • A person tries to rush you to make a quick payment
  • A person telling you that your account has been hacked and that you need to share information
  • A bank calls you and tells you to send money via Zelle

In these situations, it is best to suspend contact or hang up to determine if the information you are receiving is correct.

How to Use Zelle Safely

Castorina says 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 on the safe side.

Here are some tips on how to use Zelle and other payments securely:

  • Check that you have the correct account
  • Send a small amount of money first and ask the person to make sure they received it
  • Only use home Wi-Fi or your cellular connection to avoid security holes in public Wi-Fi
  • Be careful what you share on social media, so scammers don’t know your personal life details
  • Sign up for alerts or multi-factor authentication for added security

Where to Report Zelle Scams

If you fell for a scam on Zelle or another payment app, Breyault recommends that you report the scammers.

“People don’t like to admit they’ve been victims of these scams because they’re often blamed for it. They often blame themselves,” Breyault notes. “While reporting won’t get you your money back, it does help law enforcement, identify trends, and help protect other consumers.”

It is recommended that you report your scam by doing the following:

Contact your bank

The first thing you can do when you realize you’ve been scammed is to call your bank or credit union. Your financial institution can further investigate the situation and freeze bank accounts if you were hacked. You can also request that the money be returned to you. However, you are unlikely to get your money back.

“They could at least pass on the information, which would hopefully prompt the receiving bank to look into it,” Saunders says.

Report to law enforcement

After contacting your bank, you can file a police report on the scammer. In most cases, there will be a dedicated fraud reporting division or hotline.

Law enforcement may also report this information to your state’s attorney general. The state attorney general can review your report to identify illegal activity.

Additional Resources

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

  • Consumer Financial Protection Bureau: The Consumer Financial Protection Bureau offers educational resources on many topics involving scams. For example, you can learn about elder financial abuse and phishing.
  • Federal Trade Commission: You can file a report with the Federal Trade Commission. Reports are shared with 3,000 law enforcement agencies across the United States.
  • FBI Internet Crime Complaint Center: The FBI Internet Crime Complaint Center investigates all online crimes. You can file a complaint with the center if you or someone you know is the victim of an online scam involving certain types of transactions.

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