Peer to Peer Payment Payment Service (P2P)  Zelle is used by many people to quickly and conveniently send money electronically from your credit card or bank account. Sending money through Zelle only requires you to enter the recipient’s phone number or email address.  Zelle is an app created by the company Early Warning Services (EWS) which is owned by seven of the biggest banks in the United States including Bank of America and Capital One.  Hundreds of banks and credit unions offer Zelle as a service.

Unfortunately, Zelle has proven to be easily exploited by scammers and unlike scams targeting your credit cards directly, you may not have as much protection under the law to get your money back if you do get scammed.  In addition to scammers luring their victims to pay for worthless items through Zelle, scammers are also sending phishing emails and text messages in which they lure their victims into providing their Zelle usernames, passwords and PINs to take over their victims’ bank accounts through their Zelle accounts.

Following many complaints from scammed Zelle customers about the difficulty in getting their money back from their banks after being scammed, Senators Elizabeth Warren and Robert Menendez contacted EWS telling the company that it had to provide “appropriate redress to defrauded customers.”

TIPS

Before signing up for any Zelle or any other P2P service, you should familiarize yourself with their fraud protection rules. In the fine print of many P2P services, you may find that you have little, if any, protection if you use the account to purchase something that ends up to be a scam. While PayPal offers significant protection from fraudulent transactions, Zelle, for example does not offer such protection, which is why these services should never be used for commercial transactions, but only to transfer small amounts of money to people you know. In order to protect your account from being hacked and being taken over by a scammer who could access your credit card or bank account, you should use a PIN or other dual factor authentication whenever your particular service provides for it.

If you are hacked and your Zelle account  is tied to a bank account, you should be able to get the money refunded if you report it immediately pursuant to the Electronic Transfer Act, however some banks are taking the position that the Electronic Transfer Act does not apply to many victims of Zelle scams. However, if you delay in reporting the fraudulent use of your Zelle account, you risk losing your entire bank account.

To avoid having your Zelle account and other accounts from being taken over by hackers, never provide your username, password or PIN in response to any email, text message or phone call unless you have absolutely confirmed that the request for this information is legitimate, which it never is. You can confirm this by contacting your bank or other company by calling them at a telephone number you know is accurate. Even if you get a call that appears to come from your bank or other company with which you do business, your Caller ID can be tricked by spoofing to make the call appear legitimate when it is not.

For those of you receiving the Scam of the day through an email, I just want to remind you that if you want to see the ever increasing list of Coronavirus scams go to the first page of the http://www.scamicide.com website and click on the tab at the top of the page that indicates “Coronavirus Scams.”  Scamicide has been cited by the New York Times as one of three top sources for information about Coronavirus related scams.

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