Zelle Fraudsters Find New Victim Pool: Consumers Who Don’t Even Use Zelle

Photo by Daniel M Ernst / Shutterstock.com

Milt Tipperman had never heard of Zelle before April 18, but he learned about the peer-to-peer (P2P) payment app quickly when eight fraudulent Zelle transactions drained $800 from his checking account.

“I was mad, and I still am,” says Tipperman, of Maryland. He says his bank, PNC, is investigating, but when I spoke to him on Monday, he was still short the money. “I have never used or even heard of Zelle before. I have never used my cellphone to do banking … They apparently provide a service to people who choose to use their service, but for everyone else who do not use their service, they are a threat.”

Zelle is exploding in popularity with consumers and apparently with fraudsters, too. Designed by big banks to compete will digital-age P2P apps like Venmo, Zelle has continued to pick up steam.

The firm that manages Zelle, Early Warning, says 5,000 financial institutions are signed up to use the network. Just one, Bank of America, reported recently that its Zelle transaction volume had doubled in a year, to 58.1 million transactions in the first quarter of this year, up from 28.6 million in 2018’s first quarter. The value of the payments grew from $9 billion to $16 billion during that span.

Last year also saw an avalanche of complaints against the service, as users found out the hard way that their transactions come with no credit card-style fraud protections. Fraudsters seized on this; a typical scam involves requesting Zelle payments for concert tickets that were never delivered.

Zelle warns users to treat its payment system like cash, and it won’t help consumers who unknowingly send money to criminals.

But recently, a new spate of fraud complaints using a method that’s more troubling has hit Zelle — complaints from consumers like Tipperman, who’ve never signed up for the service.

As during last year’s outbreak of fraud cases, consumers are frustrated because many feel they are being bounced back and forth between their bank and Zelle, with neither entity taking responsibility or making any offers to refund losses, which is the standard response in cases of credit or debit card fraud.

Early Warning told me it is investigating Tipperman’s complaint, but the Zelle manager did not offer comment by press time. Amy Vargo, PNC vice president of media, said the firm couldn’t comment on specific customers, but said Tipperman’s case had been escalated.

It appears criminals have found a way to open Zelle accounts attached to consumers’ existing bank accounts and then send money to themselves.

In Tipperman’s case, criminals completed eight transactions sent to three different recipients.

“The first person I talked to said we must have given our ID and password to somebody. Of course, that didn’t happen,” Tipperman said.

He has since closed his bank account and expects he’ll be reimbursed for the fraud. Still, he’s frustrated.

“When I called Zelle, I was told they can do nothing since their records use phone numbers and my phone number is not in their records. So a thief is using their (own) cell number to open a Zelle account using my bank account. My bank, PNC, said they cannot block Zelle transactions from my account,” Tipperman said.

It’s not hard to find similar-sounding complaints online, several from around the same time period as Tipperman.

“Our online banking was compromised, and money was moved via Zelle. We were told this was our doing. We are victims and are being treated as crooks. Legal action might be necessary,” wrote one Twitter user on April 18. The user confirmed to me later that his request for a refund had been denied.

“We have never used Zelle, and yet someone was able to gain access to our account, activate Zelle and send money to an email address without our knowledge or consent. We were told by the bank’s investigators that the transaction was legitimate, and they denied our claim,” he said.

In March, another Twitter user wrote: “I woke up this morning to find $1,000 in fraudulent transactions from Zelle to my TDBank_US account. Turns out I’m seeing dozens of stories this morning of rampant bank fraud associated with Zelle.”

The problem isn’t new. Last May, an NBC affiliate in San Diego reported a string of similar-sounding fraud events involving account takeovers.

“Consumers like Brad Miller say they’ve been robbed in a matter of seconds,” the KNSD report said. “Miller said he’s banked with Wells Fargo for more than 29 years. He said everything was fine until recently, when he got an alert on his phone saying his Wells Fargo password had been changed.”

It’s unclear what security tools Zelle uses to authenticate bank account holders at signup, permitting them to link bank accounts to their smartphones for instant payments.

One possible scenario: Criminals are using typical credential-stuffing attacks to gain access to victims’ online bank accounts, then using that access to arrange Zelle transfers. Or they could be tricking victims into divulging login information some other way.

Last year, Early Warning told the NBC station it was taking reports of non-Zelle user attacks seriously and has implemented several systems to prevent such fraud.

“We are listening to, and acting on feedback, working closely with our financial institution partners to resolve issues quickly, or addressing situations directly when the Zelle app is used to originate a transaction … We and our partner financial institutions each apply multiple layers of protection across both the Zelle app and the mobile banking apps, respectively, alongside 24/7 fraud monitoring at the network level,” the firm said.

More from Bob Sullivan:

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Read Next
8 Surprising Things No One Tells You About Retirement
8 Surprising Things No One Tells You About Retirement

Knowing what to expect can help you prepare for — and adjust to — life in your golden years.

15 Great Amazon Finds You Can Buy for Less Than $5
15 Great Amazon Finds You Can Buy for Less Than $5

These products offer big value at a small price.

The 3 Worst Money Mistakes You Are Making at the Gas Station
The 3 Worst Money Mistakes You Are Making at the Gas Station

Beware these cash-guzzling missteps when you stop at any gas station.

12 Ways Retirees Can Earn Passive Income
12 Ways Retirees Can Earn Passive Income

These simple ways of earning income without a lot of active, ongoing effort can stretch your retirement dollars.

8 Things I Always Buy at Target
8 Things I Always Buy at Target

I grew up shopping at the original Target store and am a lifelong fan. Here are my favorite purchases.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

This Is the Most Popular Age for Claiming Social Security
This Is the Most Popular Age for Claiming Social Security

Both men and women are most likely to start receiving Social Security benefits at this age.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?
Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

You could save more than $30,000 by setting aside these costly expenses for just one year.

6 Things You Should Never Buy at Trader Joe’s
6 Things You Should Never Buy at Trader Joe’s

We love Trader Joe’s for plenty of reasons. But think twice about this handful of products.

Don’t Toss These 7 Household Items — Sell Them
Don’t Toss These 7 Household Items — Sell Them

Here’s how to earn cash as you give new life to these unwanted items.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have these documents that are crucial to their golden years — especially during a pandemic.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

11 Expenses That Quietly Drain Your Wallet
11 Expenses That Quietly Drain Your Wallet

It’s scandalously easy to overspend in these areas of your life.

9 Dumb Ways You Are Ruining Your Home Value
9 Dumb Ways You Are Ruining Your Home Value

Homeowners, beware these mistakes that can drive away potential buyers.

This Is the Cheapest Place to Buy a Used Car
This Is the Cheapest Place to Buy a Used Car

Looking for a good deal on a set of wheels? This should be your first stop.

10 Things That Really Are Free on Amazon
10 Things That Really Are Free on Amazon

These freebies are available to anyone — no Prime membership necessary.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

11 Disgusting Household Items You Should Toss Already
11 Disgusting Household Items You Should Toss Already

Never keep these items past their prime.

10 Surprising Foods You Can Freeze — and How I Freeze Them
10 Surprising Foods You Can Freeze — and How I Freeze Them

How many of the foods have you thought to put in the freezer?

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.