Houston – Chase, Bank of America, Wells Fargo... no matter which bank you use, you probably trust your bank to protect your money. But consumer advocates are calling out the nation’s largest banks for giving thieves easy access to your cash through an app and platform they created. They say new numbers from some of those banks show just how much criminals are making from Zelle.
To be clear, Zelle is not the only app criminals use to scam consumers out of their money, but it is the only app created by banks and directly connected to your bank account. Fraud experts say that is exactly why thieves like it so much.
“With Zelle, money moves between bank accounts within minutes, not days.. making it fast, safe and easy to send money.” That’s the script of Zelle Pay on the app’s website.
U.S. Senator Elizabeth Warren takes issues with that.
“It is definitely fast. Zelle is fast. Zelle is easy,” Warren said at a hearing on September 22nd. “And they increase bank profit margins. But Zelle is not safe.”
How rampant is Zelle fraud?
Last year, Zelle users were defrauded out of $440 million.
Senator Warren asked the seven largest banks that created Zelle to report how many customers have filed Zelle fraud claims.
Chase, Wells Fargo and Capital One have yet to disclose the information.
The banks that did release the numbers show the fraud is increasing rapidly. In 2020, Bank of America customers reported 49,652 Zelle fraud and scam claims. In 2021, the number increased to 131,509.
Most of the victims, like Hank Mollenar, never got their money back.
“I was like ‘No, wait a minute. This was fraud. Y’all supposedly called me back.’”
Mollenar lost two thousand dollars when he received a call from someone claiming to be with Bank of America, asking him to reverse a Zelle transfer they had flagged as fraud.
That call was fraud; and Bank of America told Mollenar his money was gone.
“The banks are arguing if someone tricks you into making a payment, then that wasn’t unauthorized. That was authorized. You authorized that payment, even though you were tricked,” explained Jason Zirkle with the Association of Certified Fraud Examiners.
“You have to be your own advocate. You need to have this ability to stand back from the situation and look at it objectively... and think ‘Wait a minute. Why is my bank asking me to send money to myself?’”
Out of the 4 banks that did answer Senator Warren’s request for information, they said only 3,473 customers were repaid money out of 192,878 Zelle fraud cases reported.
Right now, there is nothing to require banks to repay customers who were scammed or tricked into authorizing payments. Lawmakers could clarify the rules to require them to. In the meantime, you can find information on how to use peer to peer payment apps safely with AARP.