The Consumer Financial Protection Bureau (CFPB) is investigating Zelle and major banks like Bank of America, JPMorgan Chase, and Wells Fargo over fraud issues that have resulted in $870 million in consumer losses since Zelle’s launch in 2017.
Zelle, meant to compete with apps like Venmo and CashApp, has come under fire because these banks failed to protect users from fraud. In the rush to launch, they skipped key safeguards, leaving users vulnerable to fraudsters.
Key Takeaways:
- Consumer Losses: A staggering $870 million lost to fraud, with banks failing to properly investigate complaints.
- Lack of Safeguards: Banks rushed the launch of Zelle without ensuring it was secure.
- Fraud Stats: Despite Zelle’s claims of 99.95% scam-free transactions in 2023, its growth outpaced its fraud prevention.
The CFPB’s lawsuit shows how users were left to deal with the fallout of fraud, with many not getting help or reimbursement from their banks. Zelle insists it has strong policies, but the CFPB claims the lawsuit exposes bigger flaws.
Common Zelle Frauds You Should Know About:
- Fake Emails and Texts: Scammers pretending to be from Zelle or your bank ask you to click on links or share personal details.
- Phishing Scams: Fraudsters create fake websites or emails to steal your sensitive information like passwords or codes.
- Account Takeover: Hackers get into your account and send money without your approval.
- Facebook Marketplace Scams: Scammers post fake items for sale and demand Zelle payments.
- Puppy Scams: Fraudsters sell fake puppies online, collect payments, and disappear.
- Advance-Fee Scams: You’re asked to pay up front for loans, job offers, or prizes, but the scammer vanishes.
- Romance Scams: Scammers create fake dating profiles to build trust and ask for money through Zelle.
- Fake Customer Service Calls: Scammers pose as customer service reps and ask for payment or personal info.
If you’re using Zelle or any peer-to-peer payment service, always be cautious. Keep an eye out for red flags, and if something seems too good to be true, it probably is. Be smart about your transactions and make sure you’re protected.
Sources:
https://www.americanbanker.com/news/cfpb-sues-bofa-jpm-and-wells-over-zelle-fraud
https://thehill.com/business/5050661-zelle-fraud-consumer-protection-bureau/