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Beware of the Zelle Scam!

Zelle Scam Pic StampOutScams Zelle Scam Blog Post

What is Zelle?

Launched in June 2017, Zelle is a peer-to-peer, sometimes called P2P, payment service. Zelle is so easy to use, which makes it very attractive to users….and to scammers. Zelle is accessed easily through a phone or small device app. It allows users too easily and instantly transfer money to other Zelle registered users. It is used many users to payback friends or family, pay rent, receive rent, pay bills or just about anything else that requires the transfer of funds.

Zelle is owned by Early Warning Services. Believe it or not, Early Warning services is a consortium of major United States banks, including Bank of America, Chase, Capital One and Wells Fargo. Whether bank customers know it or not, Zelle is available to over 100 million banking customers. However, banking customers need to “BEWARE OF THE ZELLE SCAM!”

What is the Zelle scam?

The Zelle scam targets current users of the Zelle banking app. The reported Zelle scams consist of manipulating people with fraudulent information and scare tactics. Scammers use false claims and representations to get people to unknowingly authorize money transfers. A common scam starts with an email or text message asking a user to confirm a large, fake Zelle payment. This is what is called an attention getter. When the user replies that they didn’t authorize the transfer, the scammer follows up with a phone call pretending to represent the bank. The scammer will use a free app to spoof the financial institution’s phone number.

The scammer walks the caller through bogus instructions on how to reverse the unauthorized claims. Of course, this step actually results in transferring money to the criminals. The scammer gets the Zelle user to provide them with the two-factor authentication code sent to them by Zelle. Once they receive that code, they can access Zelle and change the banking information to their own information. In other words, instead of you bank receiving funds, the scammers bank will now receive funds. They then direct funds from your account, to theirs.

Scammers pose as utility representatives

Along with masquerading as your bank, scammers might also pose as institutions such as utility companies. Numerous victims have reported facing threats of service disconnection from someone posing as a representative from an electric company. Of course the scammer request Zelle payments from the victim to keep the power on. The victims are not in danger with the utility companies , but are scared into believing they are. Out of fear, the send over money to the scammer via Zelle. The scammer then disappears with their hard-earned funds.

Scammers may not limit themselves to being utility representatives. Scammers are opportunists. So any vendor that requires payments is a potential breeding ground for scammers. One thing to note, legitimate utilities or vendors rarely call their customers for payments. They usually send notices demanding payment or something negative will occur; like a utility shutoff. So if you do get a call, be suspicious or just hang-up.

Steps to avoid the Zelle scam

 There are some common sense steps you can take to avoid the Zelle Scam. Follow the below steps to avoid being duped by Zelle scammers:

  • Number one is don’t respond to unsolicited text messages or e-mails. A lot of scams start out this way, so best to avoid them at all costs.
  • Keep an eye out for new recipients who have urgent deadlines or requests. Another common trait among most scams is a sense of urgency.
  • Never, ever give anyone your two-factor authentication code. Once you set up this two factor code, keep it to yourself. Also, banks will never call you for that code. Period!
  • Use Zelle only for transfers to friends, family or businesses you know or trust. Remember, if you make a payment with Zelle, you may not be able to recover the money from the bank.
  • If you are some victimized by a Zelle scammer, call your bank immediately. Inform them of the scam, how much you lost and request a reimbursement of funds lost. If they refuse to refund your money, look to the next section for guidance.

Banks refusing to refund money lost to Zelle Scammers!

So, here is one of the more really important parts to remember about the Zelle scam. Probably one of the parts that motivates scammers to keep perpetrating this scam. Of course, one of the first things you should do if you think you have fallen prey to the Zelle scam, is call your financial institution. Because a Zelle transaction is instantaneous, you will want to call immediately after you become aware of the transaction.

However, according to many reports, banks have been reluctant to reimburse losses from Zelle scams. The banks argument is that since the transactions were actually approved by the account holders. This alleged customer approval comes when the customer naively gives the scammer the two-factor authentication code.

Banks refusing to refund lost funds: Call the press!

Here are a couple tips to follow if your bank refuses to return funds lost because of a Zelle scam. These tips are important, because many Zelle scam victims have reported a pattern of refusal to reimburse their losses as a result of the Zelle scam. Banks are hanging their hats on the false argument that because the customer authorized the Zelle transaction, they are not on the hook for reimbursement of the funds. Completely ignoring the fact that the customer was tricked into sending the funds through Zelle. It is this lack of support from the banks and the immediancy of Zelle, that has made it a savory scam for fraudsters. This is exactly why Zelle scams are skyrocketing.

As mentioned previously, there are a couple of tips for consumers if a bank refuses to refund money lost from a Zelle scam. Many Zelle victims who have been denied reimbursement by banks have indicated that it was only after contacting their local news channel, that something happened. Specific news reports on the banks refusal to reimburse a named customer, for something that is obviously fraud, has led to a quick change of heart on the banks part. Nothing like bad press to cause a bank to change their minds.

Banks refusing to refund lost funds: Cite Regulation E!

Here is another excellent reference tip for consumers when fighting with a bank who refuses to reimburse money lost from a Zelle scam. Go ahead and cite them what is known as Regulation E. In June 2021, the Consumer Financial Protection Bureau clarified its position on banks required compliance with the Electronic Fund Transfer Act of 1978. This act is known as Regulation E. The banks were basing a lot of their argument against reimbursing customers on the wording of this Regulation.

Fortunately for consumers, the Consumer Financial Protection Bureau now states that “if a third party fraudulently induces a consumer into sharing account access information, that consumer should receive the same protections as if the money were acquired from a stolen debit card or other banking access device.

Well, just why is this clarification so important? Well it takes away the bank’s argument that because the customer gave out their two-factor authentication code, they were not liable for reimbursement. The electronic transfer act gives consumers a big reason to report Zelle scams immediately. The law requires consumers to notify their banks of loss or theft within two business days to receive full protection.

It is important to note that this guidance only protects consumers who are unwittingly tricked into transferring money as part of the Zelle scam. If at this point the bank refuses to reimburse your money from a Zelle scam, you can tell them you will be filing a complaint with the Consumer Finacial Protection Bureau. After hanging up with the bank, you should immediately file your complaint.

For guidelines on where to report the scam, visit Zellepay. They offer guidance on where to report Zelle scams or attempted scams.

Watch a breakdown of Zelle Scam on our YouTube channel

Exactly how the Zelle financial app can be exploited is a mystery too many. It seems impossible that scammers could find a way to involve this app in a scam. Well, give the scammers time and they will figure it out. For a video breakdown of how the Zelle app, and other financial scams, are used by scammers visit our YouTube channel. We have created a video specifically describing how the Zelle app scam is implemented.


If there is one thing to learn from this blog post, it is be careful and use common sense when utilizing the Zelle app. You can be scammed almost instantly by a Zelle scammer. Zelle is a popular banking app, used by a lot of financial institutions and their customers. So the pool of would-be victims is huge!

There is a lot of additional information on the Zelle scam. An excellent resource relative to the Zelle scam, and numerous other scams, is the AARP Fraud Watch Network. It is a fantastic resource and free to use. They have a fantastic podcast on their “The Perfect Scam” weekly podcast. They have a full podcast devoted to the Zelle scam.

Just remember to use common sense whenever you feel like you’re about to be scammed. Stop, take a breathe, and ask yourself if this feels right. If it doesn’t pass the “gut-check” then move quickly away from the situation.

One of my favorite, quick easy tools to use is a Google check. If I think something might be a scam, I type in the topic, for example, Zelle, followed by the word scam. If there is a scam involving Zelle, or any other topic, and the word scam is included in the search results, there is most likely a scam somewhere in the world involving that topic. Someone has taken the time to write something that ends up in search results that includes your topic and the word scam. Probably bad news!



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