TAMPA, Fla. (WFLA) — Popular peer-to-peer money transfer system Zelle has come under fire as fraud cases soar and consumers across the country lose millions.
Zelle, owned by major banks, is integrated with many online accounts. Transactions are instant, which is attractive to consumers. But they are also irreversible, which attracts criminals.
Scott Schaefer of Pinellas Park, Florida said he lost $9,000 from Zelle and unlike many reported cases, he didn’t fall for a scam and initiated the transfers itself.
“I look at my account and all of a sudden money is being transferred to someone, and I have no idea who it is,” Schaefer said.
He said he called Chase Bank immediately when he saw the first pending transaction and asked to stop the transfer.
“Two hours later — after dropped calls, people giving scripted questions and answers and so on — they say they’re going to look into it, and that’s it,” Schaefer said. “You head into the weekend and you’ve lost almost $5,000.”
Not only did the transfer continue, but Schaefer said he was touched again after transferring his money to a second new account and asking that Zelle not be tied down. That brought his losses to $9,000, he said.
His claims to recover the money were dismissed. He said Chase blamed him, saying the transfers appeared to come from his device, which Schaefer denies.
“Of course it looks like that,” he said. “That’s fraud.”
Schaefer now blames Chase.
“Why do you put money in a bank? To keep him safe. That’s the only job they have: to keep your money safe. They didn’t,” Schaefer said.
This story takes place across the country. Scammers hack consumer devices or use phishing techniques. Some deceive consumers by unknowingly sending them money through Zelle.
Once the money is gone, it’s almost impossible to get it back.
The explosion of fraud cases through Zelle is attracting the attention of federal lawmakers, including U.S. Representative Gus Bilirakis, who say more consumer protections are needed.
“We need more teeth in the law because these crooks, they find a way,” Bilirakis said.
Bilirakis is the leading member of the consumer and trade protection subcommittee. He says he plans to push for change, perhaps similar to credit card fraud protections.
He’s not the only one asking questions. Two Democratic senators, Elizabeth Warren of Massachusetts and Robert Menendez of New Jersey, wrote a letter to Early Warning Services, Zelle’s parent company. In the letter, the senators say, “Your business and the banks have a clear responsibility to more aggressively protect consumers.
The senators demanded answers, including how the banks and Zelle determine which consumers get their money back and which don’t. They also want to know what is being done to prevent fraud in the first place.
How to protect yourself
Zelle is created and owned by a consortium of major US banks, including Bank of America, Chase, Capital One and Wells Fargo. It’s free, and last year people sent $490 billion through Zelle, more than double Venmo’s $230 billion, according to The New York Times.
So how can you protect yourself?
Most Zelle scams start with phishing tricks and techniques, according to the FBI.
In a common scam, the scammer poses as the bank itself. You may receive an email or text asking you to confirm a big fake Zelle payment. When the user replies that they did not authorize the transfer, the scammer follows up with a phone call pretending to be the bank. The phone number is usually spoofed, so it appears on the caller ID as bank. You are then guided through instructions on how to cancel unauthorized claims. What is really happening, however, is that you are transferring money directly to criminals.
Don’t give out any personal information over the phone or click on text links from people you don’t know.
Can you get your money back if you are the victim of fraud?
It’s a tricky question. There have been reports across the country that some consumers are getting money while others are not. Schaefer says no.
When banks refuse a request, it is usually because they claim that the transactions were in fact approved by the account holders.
The Consumer Financial Protection Bureau clarified its position on banks’ required compliance with the Electronic Fund Transfer Act of 1978 last year. The CFPB states that “if a third party fraudulently induces a consumer to share account access information”, that consumer should enjoy the same protections as if the money had been acquired from a stolen debit card or another bank “access device”.
If your bank refuses to reimburse you for a Zelle scam, you should promptly report it to local law enforcement and file a complaint with the CFPB.
Regarding Schaefer’s situation, a Chase spokeswoman sent this statement: “We have again reviewed these transactions and they are consistent with how Mr. Schaefer accessed his accounts.”
No other information about his case was provided.
Schaefer says his case is being investigated by the Pinellas Park Police Department. He said he wouldn’t stop fighting for answers.
“If I let it go, it’s basically saying, ‘Yeah, I’m responsible for this,’ and I’m not,” Schaefer said.
The Chase spokesperson sent this additional general advice to consumers:
- Never provide your personal account information over email, phone calls, or text messages
- Be careful when sending money. It is important to verify who the recipient is before sending money, as you may not be able to recover your money if it is accidentally sent to the wrong person. When you send money to a user registered with Zelle from your Chase account, you can see whose name is registered on the phone number or email on the other end. Always confirm that the recipient is who they say they are before sending money.
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