Zelle fraud is rising. And banks aren’t coming to the rescue

[pizzadude]

https://www.cnn.com/2022/10/03/business/nightcap-zelle-fraud-warren-investigation/index.html

Among the investigation’s key findings, which corroborate anecdotal evidence reported by the Times:

• Banks are not repaying 90% of cases in which customers were tricked into making payments on Zelle.
• An estimated $440 million was lost by Zelle users through frauds and scams in 2021. But banks “appear not to have provided sufficient recourse to their customers.”
• “Authorized” vs “Unauthorized:” Under the a federal rule known as Regulation E, banks are technically only liable to cover fraudulent activity when it involves “unauthorized” transactions. Say, when someone steals your credit card and makes purchases without your permission. But if someone persuades you to send them $500 through a phishing scam, banks consider that “authorized” and won’t reimburse those funds.
• BUT… The bank data reviewed by Warren’s office suggest even the bulk of unauthorized cases are going unpaid. For example: PNC Bank indicated that its customers reported 10,683 cases of unauthorized payments totaling over $10.6 million. It refunded only 1,495 cases, totaling $1.46 million.

[coldfusion]

This is an issue that has become much more commonplace over the last year,  especially with online purchases of products in high demand where even long term established vendors, both online and B&M,  have great difficulty in obtaining product.  Lots of scam websites hve been popping up over the last 15 months or so.

If an online vendor is running a website with a domain that was only registered sometime in the last year or so that only accepts Zelle and does not accept credit cards, tread carefully as there's a high probability that they are in fact a scammer.

[CreditCuriosity]

Why I refuse to use Zelle..  To many weird things I have read can happen.  Really only trust paypal/venmo for me personally if vendor say person/vendor says zelle I walk away and say thanks, but no thanks.

[SweetCreditObsession]

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@coldfusion wrote:

This is an issue that has become much more commonplace over the last year,  especially with online purchases of products in high demand where even long term established vendors, both online and B&M,  have great difficulty in obtaining product.  Lots of scam websites hve been popping up over the last 15 months or so.

If an online vendor is running a website with a domain that was only registered sometime in the last year or so that only accepts Zelle and does not accept credit cards, tread carefully as there's a high probability that they are in fact a scammer.

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Excellent point. The consumer is on their own and this is a great reason to tread lightly when it comes to sending money to entities or individuals that you do not know well. It boggles the mind that banks and credit unions are pushing this so broadly and do not offer any consumer protections for it.

[SweetCreditObsession]

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@CreditCuriosity wrote:

Why I refuse to use Zelle..  To many weird things I have read can happen.  Really only trust paypal/venmo for me personally if vendor say person/vendor says zelle I walk away and say thanks, but no thanks.

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I see your point. I only Zelle with close relatives. 

[Anonymalous]

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@SweetCreditObsession wrote:

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@coldfusion wrote:

This is an issue that has become much more commonplace over the last year,  especially with online purchases of products in high demand where even long term established vendors, both online and B&M,  have great difficulty in obtaining product.  Lots of scam websites hve been popping up over the last 15 months or so.

If an online vendor is running a website with a domain that was only registered sometime in the last year or so that only accepts Zelle and does not accept credit cards, tread carefully as there's a high probability that they are in fact a scammer.

---

Excellent point. The consumer is on their own and this is a great reason to tread lightly when it comes to sending money to entities or individuals that you do not know well. It boggles the mind that banks and credit unions are pushing this so broadly and do not offer any consumer protections for it.

---

I suspect that might be part of the reason. If they're absolved from responsibility, that means there's less cost to them. I'll be curious to see what protections are put in place for things like JP Morgan's upcoming pay by bank service -- they know consumers want credit card-level protections, but every financial incentive pushes them the other way.

I know landlords who only accept Zelle. It's convenient for them, because there's no cost and it's instant. Though at least in that case, the landlord is a known individual.

[SweetCreditObsession]

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@Anonymalous wrote:

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@SweetCreditObsession wrote:

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@coldfusion wrote:

This is an issue that has become much more commonplace over the last year,  especially with online purchases of products in high demand where even long term established vendors, both online and B&M,  have great difficulty in obtaining product.  Lots of scam websites hve been popping up over the last 15 months or so.

If an online vendor is running a website with a domain that was only registered sometime in the last year or so that only accepts Zelle and does not accept credit cards, tread carefully as there's a high probability that they are in fact a scammer.

---

Excellent point. The consumer is on their own and this is a great reason to tread lightly when it comes to sending money to entities or individuals that you do not know well. It boggles the mind that banks and credit unions are pushing this so broadly and do not offer any consumer protections for it.

---

I suspect that might be part of the reason. If they're absolved from responsibility, that means there's less cost to them. I'll be curious to see what protections are put in place for things like JP Morgan's upcoming pay by bank service -- they know consumers want credit card-level protections, but every financial incentive pushes them the other way.

I know landlords who only accept Zelle. It's convenient for them, because there's no cost and it's instant. Though at least in that case, the landlord is a known individual.

---

It's incredible. I know that Zelle is not always instant between institutions. For instance, I wanted to send funds from one CU account to an account at a different CU. The rep at the second CU suggested I use Zelle. It took a few days. I didn't see the value in this delayed process and have done standard ACH transfers since.

[Anonymalous]

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@SweetCreditObsession wrote:

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It's incredible. I know that Zelle is not always instant between institutions. For instance, I wanted to send funds from one CU account to an account at a different CU. The rep at the second CU suggested I use Zelle. It took a few days. I didn't see the value in this delayed process and have done standard ACH transfers since.

---

That might be related to your institution's per transaction, daily, and monthly limits. I ran into this during the pandemic, when Ally had a very low Zelle per transaction limit ($500). I could send $500 instantly, but anything larger would take 3 days. Ally has since raised it back to their normal high limit -- $2,000 daily (or $5,000 with a 3 day lag). Which makes me wonder if they were seeing some fraud and had to put some protections in place.

Zelle daily limits tend to be in the $1,000 to $2,000 range for larger banks, but can be significantly lower for smaller banks or CUs, if they offer Zelle at all. The monthly cap is often only a couple times the daily limit, so it's easy to bump up against that as well; and new accounts are often even more restricted. By comparison, ACH limits tend to be much higher.

[805orbust]

I second @SweetCreditObsession position. I hate Zelle. I can't get the stupid thing to work and it took forever for the money to reach the recipient (a friend/business associate). Dude was looking at me like I was flim-flamming him. PayPal is the way to go... but NEVER keep a cash balance in there. Maybe a couple hundred or so. I've heard nightmare stories of them seizing funds for months or years with no warning...  they are not a bank and arent Subject to the rules/limitations on banks...

[M_Smart007]

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@SweetCreditObsession wrote:

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@Anonymalous wrote:

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@SweetCreditObsession wrote:

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@coldfusion wrote:

This is an issue that has become much more commonplace over the last year,  especially with online purchases of products in high demand where even long term established vendors, both online and B&M,  have great difficulty in obtaining product.  Lots of scam websites hve been popping up over the last 15 months or so.

If an online vendor is running a website with a domain that was only registered sometime in the last year or so that only accepts Zelle and does not accept credit cards, tread carefully as there's a high probability that they are in fact a scammer.

---

Excellent point. The consumer is on their own and this is a great reason to tread lightly when it comes to sending money to entities or individuals that you do not know well. It boggles the mind that banks and credit unions are pushing this so broadly and do not offer any consumer protections for it.

---

I suspect that might be part of the reason. If they're absolved from responsibility, that means there's less cost to them. I'll be curious to see what protections are put in place for things like JP Morgan's upcoming pay by bank service -- they know consumers want credit card-level protections, but every financial incentive pushes them the other way.

I know landlords who only accept Zelle. It's convenient for them, because there's no cost and it's instant. Though at least in that case, the landlord is a known individual.

---

It's incredible. I know that Zelle is not always instant between institutions. For instance, I wanted to send funds from one CU account to an account at a different CU. The rep at the second CU suggested I use Zelle. It took a few days. I didn't see the value in this delayed process and have done standard ACH transfers since.

---

I recently had an issue withe Zelle holding the funds, and No I was not at any limit.

I verified through Affinity FCU that the funds did in fact leave my Acct.

Called Charles Schwab and confirmed that Zelle was the one holding the funds.

Took 48 Hours for Zelle to release the funds.  It is hit or miss with Zelle.

Seem's they march to the beat of their own drum.

I would rather write an old fashioned paper check (or ACH the funds)