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.  Presently 2,400 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 thereby enabling the scammers to take over their victims’ bank accounts through their Zelle accounts.  Ironically, if your Zelle account is hacked, you are protected by law, but if you are tricked by a scammer into sending a Zelle payment, you have little protection

In the Scam of the day of October 31, 2023 I told you that after pressure from Senators Elizabeth Warren, Sherrod Brown and Jack Reed and the banks that own Zelle agreed to provide for some people who became victims of Zelle scams to be reimbursed for their losses by their bank. It appears that Zelle banks and credit unions will reimburse customers who are victims of qualifying imposter scams where the scammer poses as a bank to trick the customer into sending them money through Zelle.  However, according to Senator Richard Blumenthal, JP Morgan, Wells Fargo and Bank of America reimbursed 38% of their customers reporting unauthorized transactions in 2023 while in 2019 the banks reimbursed 62% of their customers reporting unauthorized transactions. In the Scam of the day for August 11, 2024 I told you that the Consumer Financial Protection Bureau (CFPB) is investigating whether JP Morgan, Chase, Bank of America and Wells Fargo are doing enough to protect their Zelle customers from being scammed. Now in a corporate filing with the Securities and Exchange Commission, JP Morgan Chase has indicated that the bank is “evaluating next steps including litigation” as a way of dealing with the CFPB’s investigation.

TIPS

Meanwhile, regardless of the legal wranglings between banks and the CFPB, you should look for a helping hand at the end of your own arm.  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 being a scam while PayPal offers significant protection from fraudulent transactions.   Whether the banks operating Zelle are doing enough to protect their customers from scams is an open question, it is up to consumers to recognize that Zelle 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 for your Zelle 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.

If you are not a subscriber to Scamicide.com and would like to receive free daily emails with the Scam of the day, all you need to do is sign up for free using this link. https://scamicide.com/scam-of-the-day/