Zelle, a digital person-to-person payment network used by many known and trusted banking apps such as Bank of America and Chase, has been used by hackers to steal tens of thousands of dollars from the bank accounts of unsuspecting consumers. The trend concerns experts because account holders can become victims without subscribing to the Zelle service themselves. In addition, the ease and success of the Zelle scam currently makes it an increasingly popular tactic for fraudsters.
The spate of attacks comes despite the fact that Zelle claims to be a completely secure payment platform.
“The Zelle app uses authentication and monitoring features to make your payments more secure. So whether you’re using the Zelle app or using Zelle through your bank or credit union’s mobile app or online banking, you’ll have peace of mind,” the company states on its website.
How Does the Zelle Scam Work?
The scam begins with a bank account holder receiving a phone call, supposedly from the bank. Next, the “representative” informs them of a fraud attempt on their account. After that, they receive a text containing a security code. Finally, the representatives asks the consumer to read the code back to prove their identity.In reality, the “representative” is a fraudster.
The security code is all they need to open a new Zelle account in the account holder’s name. They then use it to transfer money to their own Zelle account. Ironically, Zelle’s speed and simplicity make it a great tool for thieves. Access is easy, and transfers occur too quickly for consumers to take action before it’s too late.
The network operator behind Zelle, Early Warning Services, LLC., released a statement to respond to the recent attacks. In it, they claim it is the bank’s responsibility to help consumers.
“In cases where a consumer’s bank account or debit card have been compromised, and unauthorized Zelle payments made, consumers have rights under the Electronic Funds Transfer Act,” the statement said. “We recommend they contact their bank immediately to determine an appropriate resolution,” the statement read.”
In addition, several banks that offer Zelle released statements seeking to reassure customers. Often, they emphasize banks’ policies to make customers whole in the case of a fraud attack. For example, Chase bank released a statement emphasizing a commitment to fraud prevention solutions and reimbursing account holders when necessary.
“As with any other fraud, we reimburse our customers for fraudulent activity on their accounts. We’ve made significant investments in fraud detection and prevention technologies as well as customer education to help stay ahead of fraudsters,” the statement said.
Association of Certified Fraud Examiners