How Zelle Scams Work and How to Protect Against Them

Zelle makes sending money to friends, family members, and selected small businesses easy and convenient. As Zelle doesn’t charge a fee and money transfers are often instant, people are increasingly using this payment service. But you should watch out for Zelle scams that can trick you into sending money to fraudsters.

How do Zelle scams work, what are common Zelle scams, and what can you do to stay safe from these scams?

What Is Zelle, and How Does It Work?

Zelle is a US-based payment network owned by Early Warning Services, created by the country’s leading banks, including Bank of America, PNC Bank, Wells Fargo, Truist, Capital One, JPMorgan Chase, and US Bank.

With the Zelle app, you can send money directly to almost any bank account in the US in just a few minutes. You need an email address or a phone number to send or receive money with people, regardless of the banks they use.

Here’s how it works:

  • Enroll your email address or mobile number through the Zelle app or your mobile banking app.
  • Enter the mobile number or email address of the recipient having a US bank account.
  • Enter the amount you want to send.

Currently, Zelle works with more than 1,700 financial institutions in the US. You can check Zelle’s online database to know if your bank or credit union supports Zelle.

How Zelle Scams Work

Often, Zelle fraudsters exploit natural human feelings, such as excitement, compassion, and fear to trick users into making Zelle payments.

Scammers tell trusting Zelle users lies about something victims aspire to get or a situation they want to resolve. And then, they ask victims to transfer money through the platform. And sometimes, Zelle users lose their smartphones. Anyone who gets the lost devices makes unauthorized payments, robbing the victims of tons of money.

Examples of Zelle Scams

Here are a few common Zelle scams to watch out for.

Impersonation Scam

This is one of the most common Zelle scams. A fraudster will impersonate your friend, family member, or relative and ask you to give them money through Zelle as they need funds quickly due to an urgent situation. A scammer can also impersonate a legitimate company or institution and ask you to make a Zelle transfer.

Romance Scam

Online romance scammers create fake profiles on dating sites and befriend victims. Eventually, they present themselves in challenging situations and ask victims to transfer funds through Zelle.

Phishing Scam

Most Zelle scams involve some kind of phishing technique to lure victims into sharing account access information or any other type of financial information.

In a typical Zelle phishing scam, a fraudster contacts a victim via email or phone posing as an executive from the company and asks the victim to click on a link or open an attachment to install malware on the victim’s device.

Business Account Scam

Image of a Man Using a Card and his Mobile Phone

In a business account scam, a seller will receive an email from an interested buyer stating that the buyer (i.e. scammer) has paid with a Zelle business account. And the seller needs to upgrade to a business account to receive money. The catch is the seller would need to pay a small fee to upgrade to a Zelle business account. The money goes to a scammer when the seller makes a payment to an email address or phone number mentioned in the email.

Facebook Marketplace Zelle Scam

You see a product listing on the Facebook marketplace, and the seller only accepts Zelle as a payment method. You make a Zelle transaction, but the product never reaches your doorstep. In reality, a scammer listed a product they don’t own on the marketplace with no intention of fulfilling your order.

Fake Invoice Scam

This is a particularly common scam. Fraudsters send invoices to victims for the products or services they didn’t buy and ask for Zelle transfers. Once the victims pay the money, the scammers disappear.

Recovery Scam

Victims receive emails or phone calls reporting that there are unauthorized transactions on their Zelle accounts. Then, scammers walk victims through the process of supposedly recovering money lost in fraudulent transactions. Eventually, victims end up paying scammers to reclaim money they never lost.

Why Scammers Target Zelle Users

Zelle offers quick money transfers because it directly connects your card or bank account to the payment system. Consequently, it is almost impossible to stop a digital payment once it is sent to a recipient.

In most cases, banks and credit unions are reluctant to pay victims lured into making fraudulent payments through Zelle.

Regulation E of the Electronic Fund Transfer Act (EFTA) didn’t offer much help previously to those who were victims of misguided transactions through Zelle.

Unlike other payment networks like PayPal, Zelle often doesn’t help victims get lost funds back. All this makes Zelle a favorite payment app for hackers to target.

How to Protect Against Zelle Scams

Image of Mobile Phone SHowing a Sheild on Screen to Represent Security

Here are a few ways to avoid Zelle scams.

Ignore Unsolicited Emails and Messages

Be it a Zelle scam or any other dubious communication, you should ignore unsolicited emails and messages. If you receive any suspicious email from your bank or any other financial institution you didn’t contact, don’t give out your personal information. Instead, reach out to the institute seperately and inform it about the suspicious email or message.

Be Careful of Messages With Urgent Deadlines

Always be suspicious about messages that require you to act urgently; for example, an email stating that your Zelle account will be deactivated soon, and informing you that you need to click on a link in the next few hours to reinstate it.

You can also receive a suspicious message from your friend asking for money through Zelle to resolve a financial problem.

To stay safe, you should double-check every message that requires your immediate action.

Never Share Two-Factor Authentication Passcodes

Two-factor authentication (2FA) offers an additional layer of security to your account. No organization asks for a 2FA code over phone or message.

Never share your single-use code with anyone, even if someone claims to be from Zelle or your bank.

Use Zelle for Only Trusted Transactions

To avoid getting scammed, you should only use Zelle to send money to your friends and relatives. Making payments through your card or other trusted platforms is better for most transactions, as these often offer some form of consumer protection.

Enhance Your Phone’s Security

To prevent scammers and hackers from accessing your phone and using Zelle to swindle money from your account, you should increase your phone’s security.

Use a strong authentication method for your phone’s screen and Zelle app so that no one can access Zelle if you lose your phone.

What to Do if You Have Been Scammed

If you’re a victim of a Zelle scam, you should immediately reach out to FBI Internet Crime Complaint Center to report the fraud.

Contacting your bank and Zelle too; the latter can be reached by filling out this online form, which can also help get your money back in some cases.

Acting fast is the key to combating a Zelle scam—report fraud as soon as possible.

Be Careful to Protect from Zelle Scams

Zelle is fee-free but not fraud-free. So you should watch out for common Zelle scams. Follow the tips outlined to use the Zelle app securely. Remember to remain sceptical at all times!

You can also explore other secure methods to send and receive online payments.

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