Stories of Zelle users losing thousands of dollars in money-transfer scams continue to make headlines. Criminals are using the banking payment service to scam unsuspecting consumers. Created by major banks, Zelle provides easy electronic payments, but it also poses serious security risks.
Most of the reported Zelle scams consist of social engineering: 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 involves an email or text message asking a user to confirm a large, fake Zelle payment. When the user replies that they didn't authorize the transfer, the scammer follows up with a phone call pretending to represent the bank and spoofing the financial institution's phone number. They walk the caller through bogus instructions on how to reverse the unauthorized claims that instead actually transfer money to the criminals.
Along with masquerading as your bank, scammers might also pose as institutions such as utility companies. A woman in Lorain, Ohio faced threats of service disconnection from someone posing as her electric company, who then asked her for Zelle payments to keep the power on.
Ways to protect yourself
- Don't respond to unsolicited text messages or emails. If you receive a message that says it is from your bank, but you didn't contact them first, don't respond. Instead, call your financial institution directly to inquire about your account and any potential security issues.
- Watch for "urgent" deadlines or requests from new recipients. If you receive an email stating that you need to act immediately to resolve a financial problem, this is a red flag. Scammers use scare tactics and a sense of urgency to make you panic. With the utility scams, users were told they only had 30 minutes to act before their power was shut off. If you notice any suspicious behavior from someone claiming to represent your bank, a utility or another organization asking for immediate payment, hang up immediately and call the business directly.
- Never give anyone your two-factor authentication passcode. Two-factor authentication adds an extra layer of security to your accounts. Each time you sign into your account, you'll receive an additional one-time password, usually delivered by email or text message, that lasts for 30 to 60 seconds. Never give out your one-time passcodes to anyone. Criminals pretending to be your bank or utility company may pressure you with lots of bogus reasons for telling them your passcode, but real institutions will never ask for it.
- Use Zelle only for transfers to people or businesses you know and trust. If you make a payment with Zelle, you may not be able to recover the money if you were scammed into mistakenly authorizing the payment. While Zelle provides a convenient and easy payment service, limiting its use to people you know personally will cut down your risk of being scammed.