How Zelle Scammers Pull Off Attacks

Since its debut in 2017, Zelle — owned by seven of the country’s largest banks — has become one of the largest peer-to-peer payment networks.

However, like any other real time platforms, Zelle is vulnerable to fraud attacks. That puts users as the target of scams and made Zelle fraud cases explode in recent years as a result. To understand why fraudsters love to target Zelle, here’s everything we need to know about Zelle fraud and how it happens.

Understanding what Zelle is

Zelle is a digital payments network in the U.S. that allows users to send or receive money directly to each others’ bank accounts in real time. Using only their email address or phone number, they can transfer funds and have them available within minutes. As with other real-time payment apps, there are no fees for using Zelle.

Who owns Zelle?

Early Warning Services owns and operates Zelle. The fintech company is owned by Bank of America, Capital One, JPMorgan Chase, PNC Bank, Truist, U.S. Bank, and Wells Fargo. Zelle is also integrated with Citibank, TD Bank, SunTrust Bank, and BBandT.

What is Zelle fraud?

Zelle fraud is any unauthorized or fraudulent use of the Zelle digital payments network to send or receive money. Fraudsters use many scams to steal money through Zelle without the account holder’s permission. But because these payments—even ones made as part of a scam—are authorized by the account holder, oftentimes the victim can’t get their money back.

How could someone authorize a payment if they’re part of a scam, you ask? That’s due to the way Zelle transfers process. Money sent on Zelle, as with other real-time transactions, uses the Automated Clearing House (ACH).

These payments are immediate because they require account holder authorization to process. Because the account holder technically authorized the transfer—despite being tricked—the bank will not reverse it.

This is a highly frustrating and unfortunately common occurrence on Zelle.

Zelle does have security measures in place to prevent fraud. They use transaction monitoring and fraud detection systems. They encourage users to set up multi-factor authentication, not share logins, and be cautious of unsolicited payment requests.

But fraudsters can get around Zelle’s security measures in a few different ways. Each method has its own scam.

Can people scam you on Zelle?

Zelle scams are not only possible, they’re a favorite among fraudsters. In fact, Zelle scams and fraud cost users an estimated $440 million in 2021. The most common Zelle scams involve deception—phishing, social engineering, or impersonation.

Fraudsters send fake invoices or payment requests or investment opportunities. They ask for donations to fake charities or crowdfunding campaigns. They even pretend to be overseas lovers preying on lonely people.

The key to staying protected is knowing how these scams work.Does Zelle offer fraud protection? There is no Zelle fraud protection program. The service doesn’t offer protection, refunds, or reversals for authorized real-time payments. As their policy states, once you send a transaction it is authorized and can’t be reversed.

Can Zelle refund my money if I was scammed?

Zelle will not refund any payments that the user authorized. If you’re facing Zelle fraud issues, the service clearly states they will not refund payments that users authorized.

Can you cancel Zelle payments?

In nearly all cases, it’s not possible to cancel Zelle payments. Zelle transfers process within minutes, so once the payment has been sent, it cannot be canceled or reversed.

Why is Zelle fraud rising so quickly?

Zelle’s user base has rapidly expanded since 2020. More people using the service creates a larger pool of potential targets for fraudsters.

But more than the growing user base, the nature of Zelle itself, and the approach its owners take toward fraud, make it an ideal target. Here’s why Zelle fraud is rising rapidly.

Real-time payments aren’t reversible

Because Zelle payments are not reversible, payments made by mistake or as part of a fraud scheme are gone as soon as they’re sent. This is the first key reason fraudsters prefer Zelle to other payment methods.

Lack of user knowledge

Fraudsters often use social engineering tactics to trick users into sending money through Zelle. Because Zelle is a newer service and often the first real-time payment experience for many users, it’s ripe for social engineering scams.

Banks aren’t reversing/covering losses

Banks generally have policies in place for fraud and unauthorized transactions. In Zelle’s case, they do not offer protection on payments the same way they would other payment methods. Even in clear cases of fraud, as the New York Times reported, Zelle will not reverse transactions as they have been "authorized" by the account holder.

How to detect Zelle fraud

As a user, you need to stay vigilant guarding against scams on Zelle. But banks share in the responsibility to protect Zelle users from fraud.

All banks that offer Zelle use fraud detection platforms. These platforms use risk-based authentication to assess transactions and flag potential fraud. If a transaction trips this detection system, it flags the transaction for manual review. That’s where a digital fraud investigator steps in to take on the case and determine if there’s fraud.

These systems are also bolstered by machine learning and artificial intelligence.