Definition, how to protect yourself from scammers
- Scammers use Zelle and other payment apps because transactions are fast and hard to track.
- If you are scammed on Zelle, it will be difficult to get your money back.
- Only use Zelle for family and friends, and be sure to be careful with 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 should know about Zelle scams, so you can protect yourself while using the payment app.
How do Zelle cheats work?
A fraud occurs when a person or company tries to deceive you into giving them money directly or sharing personal information so that they can access it.
John Briault, the National Consumer Association’s vice president for public affairs, communications and fraud, says scammers are taking advantage of new payment technologies as they emerge. According to Briault, scammers have now moved on to Zelle and other payment apps for three main reasons:
- Funds sent through payment apps are quickly available after they are sent.
- Difficult to get money back due to regulation.
- Scammers can stay out of the reach of law enforcement by creating fake accounts or using other methods.
Overview of Zelle’s policies
Zelle works differently from other P2P payment apps because it’s partnered with them
and banks. You will also have to use the bank’s mobile application or online banking platform to make the payment.
“For many consumers, this leaves the impression, incorrectly, that the same kind of protection they get for other transfers through their bank, they will get on Zelle. That’s not true,” Briault points out.
Alexis Castorina, Zelle’s senior director of consumer education, says payments on Zelle should be treated like sending cash.
“Zelle does not offer a protection program for authorized payments. Once you allow a payment to be sent with Zelle, you cannot cancel it if the recipient is already registered because the money goes directly to that recipient’s bank account within minutes,” Castorina said.
As a result, when you get scammed, the Zelle website says you should contact your financial institution.
How banks see scams Zelle
Reporting a fraud 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 a lot from consumers is that they’re doing the right thing – call their bank. And report it. The bank says, ‘Sorry, there’s nothing we can do’,” says Briault.
Banks will refer to Regulation E, also known as the Electronic Funds Transfer Act, which covers customer protections for money transfers – but only for unauthorized transactions. If you click Submit willingly, it will usually be considered an authorized transaction. You may not get your money back.
If someone hacks into your account and takes your money, you’re protected by law, says Lauren Saunders, associate director at the National Center for Consumer Law.
“You should insist to your bank that it is an unauthorized fee 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 skillful tactics, but keep these four red flags in mind if you’re sending money to someone you don’t know:
- Someone who insists on being paid only through a payment app
- Someone is trying to get you to make a quick payment
- Someone tells 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 pause or disconnect the connection to determine if the information you receive is correct.
How to use Zelle safely
Castorina says that Zelle should only be used by people you know and trust. If you’re using Zelle to send money to someone you don’t know, it’s best to be careful.
Here are some tips on how to use Zelle and other payments safely:
- Verify that you have the correct account
- Send a small amount of money first and ask the person to make sure they receive it
- Use only your home Wi-Fi or your cellular connection to avoid vulnerabilities in public Wi-Fi networks
- Be mindful of what you share on social media, so scammers don’t know details about your personal life
- Subscribe to alerts or multi-factor authentication for added security
Where to report Zelle scams
If you fall for a scam on Zelle or another payment app, Breya recommends reporting the scammers.
Briault notes: “People don’t like to admit that they have fallen victim to these scams because they are often blamed. They often blame themselves.” “While reporting it may not result in your money back, what it does is help law enforcement, identify trends, and help protect other consumers.”
It is recommended that you report your scam to take the following steps:
Contact your bank
The first thing you can do after you realize that you have been scammed is to contact your bank or credit union. Your financial institution can investigate the situation further and freeze bank accounts if they are hacked. You can also request a refund. Although it is unlikely that you will get your money back.
“They might at least pass on the information, which we hope will prompt the receiving bank to look into it,” Saunders says.
Report to law enforcement
After you contact your bank, you can file a police report about the scammer. In most cases, there will be a department or telephone hotline dedicated to reporting fraud.
Law enforcement can also report this information to the state attorney general. The state attorney general can review your report to determine the illegal activity.
You can 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, including fraud. For example, you can learn about elderly financial exploitation and phishing.
- Federal Trade Commission: You can report to the Federal Trade Commission. The reports are shared with 3,000 law enforcement officials across the United States.
- FBI Internet Crime Complaint Center: The FBI’s Internet Crime Complaint Center looks at all crimes online. You can file a complaint through the Center if you or someone you know has fallen into an online fraud involving certain types of transactions.