MoneyAug 13, 2024
Scammers Exploit Zelle To Steal Millions — And Congress Pushes Banks To Reimburse Victims
Consumer Safety
Noah Weidner
Discover
Transferring money with apps like Zelle, Cash App, and Venmo is usually quick and easy — until it turns into a nightmare you never saw coming. In recent years, scams and phishing campaigns targeting these payment apps have ballooned, taking aim at Americans’ bank accounts. But one platform appears more dangerous than any other — podcaster Clark Howard calls it “Big Bad Zelle.”
Big Bad Zelle: As a product of seven major US banks, Zelle has created a convenient way for people to make instant transfers from their bank accounts. Its popularity has made it the most-used money transfer platform in the US. But its speed and ease-of-use has proven dangerous — and costly. A new report published by American Banker says Zelle scams have cost customers of America’s three largest banks nearly $1B since 2021, with many never seeing their money again. Congress could change that.
Zelle claims it has a policy requiring banks to reimburse certain scams — including unauthorized activity and impersonation fraud. They argue they shouldn’t be on the hook because of people’s inability to recognize scams.
No quick fix: Bill sponsor Sen. Richard Blumenthal says that requiring banks to reimburse scam victims will give them “a financial incentive to impose stronger measures.” However, saddling banks with covering the costs for customers with poor scam literacy could backfire, with Bloomberg’s Marc Rubinstein warning that it could bring an end to free payment apps.
