CHARLOTTE, N.C. — Zelle is a popular and convenient way to transfer money, but Channel 9 has a warning for users. In just 12 days, eight people contacted Action 9 investigator Jason Stoogenke because they were scammed out of money through the app.
Kris Leagan says she got a text that looked like it was from her bank. She says it asked if she authorized a certain Zelle transaction.
She told Stoogenke that she replied to the text stating that she did not authorize the transaction and almost immediately after she sent it, someone called her saying he was with her bank’s fraud department.
“He just seemed to have said all the right things to me,” Leagan said. She also said the caller had spoofed her bank’s phone number, so it looked correct on her caller ID.
According to Leagan, the caller walked her through a complicated process to create a new account and moved her money to it. She told Stoogenke she lost $3,500.
“(I feel) like somebody truly kicked me in my gut,” she said. “That feeling afterwards is just awful.”
Leagan filed a police report and a fraud claim with her bank, Wells Fargo. She says the bank sent her a letter refusing to replace the $3,500.
“I’m not somebody who has a lot of money. I work really hard for my money,” she said. “It’s my savings, so, yeah, it’s not good.”
CFPB believes “Regulation E” requires banks to refund the money
Zelle and banks, including Wells Fargo, offer fraud protection for unauthorized transactions, but this does not cover authorized transactions such as Leagan’s. But there is a federal law called the Electronic Fund Transfer Act, specifically a section called Regulation E.
The Consumer Financial Protection Bureau opines that if someone “induced” you into transferring money, even if you technically agreed to it, your bank has to reimburse you. Other agencies aren’t so sure, and many banks do not agree.
Cyber-security analyst and Duke University lecturer Bob Sullivan says someone needs to clarify the law, but until then, “consumers shouldn’t count on getting their money back from banks who think they have this get out of jail free card essentially.”
Zelle and the banks’ response to scams
Zelle has information posted on its website about how to avoid scams when using its platform.
The American Bankers Association offers information as well.
Stoogenke asked each of the seven banks that own the company that owns Zelle what they’re doing to combat these scams. Four provided information in time for this report:
Bank of America: “As a bank, we have a number of measures in place to proactively warn clients about scams, and we periodically reach out to customers with information about how to stay safe and avoid scams. In addition, we keep clients informed about new scam alerts through our Client Security Center on our website.”
Capital One: “We encourage all consumers to be vigilant when it comes to protecting themselves from scams and fraud, including reviewing all terms and conditions when making a purchase. For more details on Zelle fraud & scams, there is a breakdown here. As key guidance with any Zelle transaction, customers should know that the service is intended for sending money to family, friends and others that customers trust. Zelle should not be used to send money to persons with whom you are not familiar, or you do not trust. Zelle does not offer a protection program for authorized payments made with the service.”
PNC: “This is a topic that is important to us, and in fact, we have posted the following tip sheet to the top of our Security & Privacy Center on pnc.com to help our customers.”
Wells Fargo: “We are actively working to raise awareness of common scams, including through alerts in online banking sessions, customer emails, social media and our Online Security Center here . Along with the industry, we are increasing education efforts to help our customers and recently launched a campaign to raise awareness of common scam scenarios. … We’re continually reviewing and improving our practices and procedures for combatting and helping prevent customers from becoming scam victims. It’s a priority for us and the industry overall. We want to make sure everyone is aware that criminals can spoof a caller ID number, so it appears as if an unexpected call or text is from your bank. To be safe, don’t respond. Contact your bank using legitimate sources, such as the number on the back of your debit card. If a person believes that they have been a victim of a scam, we encourage them to report the scam promptly and provide as much information as possible. Although it may not always be possible to recover the funds on behalf of victims, Wells Fargo works together with other financial institutions and law enforcement to help identify suspects and recover funds when possible.”
Action 9 Advice
No matter what bank you use, if you use Zelle:
- Only transfer money to people you know and trust.
- Do not answer a text or call even if the caller ID shows it’s from your bank. Scammers can spoof your bank’s phone number. Call your bank directly if you have questions.
- Consider opening a separate account and keep a small balance in it. Use that account for Zelle, so worst-case scenario, you don’t lose much money.
(WATCH BELOW: Used Zelle to pay a scammer? Little-known law could get your money back)
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