How to protect yourself from Zelle cash transfer scams : Internet Scambusters #1,038
Digital cash transfer services like Zelle are increasingly being targeted by scammers, costing their victims hundreds of millions of dollars.
And, just to make things worse, it's next to impossible for most victims to get their money back from their banks.
In this week's issue, we highlight the most common scams and the simple steps you can take to protect yourself.
Let's get started…
Don't Fall For These 7 Big Zelle Scams
Do you have Zelle? It's not just us asking. Those or similar are the words a scammer uses when they try to trick you while using this bank-owned cash transfer service.
And although Zelle claims that 99.9 percent of its transactions are scam-free, the service is so popular that it still leaves room for hundreds of thousands of scams, which have doubled in some cases during the past few years.
Some 100 million Americans have access to the service through their personal bank accounts. It's so quick, easy, and instant that Zelle moved almost $500 billion between accounts last year.
According to the latest numbers, which we reported a couple of weeks ago, just four banks admitted they handled 192,000 Zelle scam complaints, worth $214 million, last year.
And the biggest issue, at least for now, is that if you fell for the trick, you probably won't get your money back.
7 Common Zelle Scams
Here are the most common Zelle scams:
1. Bank transfer after a supposed security issue: You may get a message pretending to come from Zelle or your bank supposedly confirming that you authorized a big transaction. Of course, you know you haven't, but before you do anything else, you get a fake call from your bank with the correct phone number, which has been spoofed.
Alternatively, you may receive a bogus message from your bank saying there's a security issue on your account and asking you to call a particular number.
The scammer then walks the victim through a procedure that is supposed to rectify the problem. In reality, it enables the crooks to transfer your money to them.
2. Zelle selling scams: You're selling a big-ticket item online, maybe through Facebook Marketplace or Craigslist.
The scammer pretends they want it and asks those words: "Do you have Zelle?" If so, they say they'll pay via the cash transfer service if you provide your email address or phone number, which is all they need.
Then, you get a message seeming to come from Zelle telling you the money is in your account, so you send off the item. But you receive no money.
3. Zelle purchase scams: Similar to the above, you may try to buy something you spotted online and the "seller" asks you to pay via Zelle.
The moment you do, your money is transferred directly to them and they fire off a spoof message confirming the transaction. But your purchase never arrives.
4. Account upgrade trick: This is a sort of advanced payment or refund scam. You agree to payment for something you're selling via Zelle. Then you get a fake message saying the other party has used a business account and that you need to upgrade your account to a similar level - for a few hundred dollars.
You contact the supposed seller who says they already paid for the upgrade in addition to the purchase price. A fake Zelle message confirms this and the scammer asks you to refund the upgrade amount to them.
5. Pay Now Threats: Scammers use Zelle to carry out one of the most common types of payment fraud - scaring you into sending money immediately via Zelle or face severe action. Usually, the crooks pretend to be from a utility company, threatening to cut you off if you don't pay within 30 minutes.
They use the same approach in phony distress calls (the so-called grandparent scam) and lottery scams, fooling people who believe they've won into paying supposed processing or tax costs via Zelle.
6. Simple theft: If you have the Zelle app installed on your smart phone and then allow someone to use the device, they may quickly access the app and transfer money to themselves in a matter of seconds.
7. Phishing: Our final and perhaps most obvious Zelle scam happens when you fall for a phishing scam, in which an email of text tricks you into giving away your bank and Zelle account details either via a bogus sign-on page or by installing data-stealing malware.
Can I Get My Money Back?
For now, probably not. The banks that co-own Zelle will usually refuse to refund the money because you actually authorized the transaction.
Only when you didn't authorize it - such as via a phishing scam - is it possible you'll get your money back, but not always.
Because of the scale of the scam, it's possible this might change in the future. The US Consumer Finance Protection Bureau is on the case!
Protect Yourself From Zelle Scams
Because your Zelle cash transfer is pretty much instant and irreversible - it's the digital equivalent of paying cash - you must notify your bank as quickly as possible if you've been scammed. Current laws (the Electronic Funds Transfer Act 1978, also known as Regulation E) require notification within two business days - and then only for unauthorized transactions.
Here are some ways to make sure you don't fall for future Zelle scams:
- Never accept a message on face value that seems to come from Zelle or your bank. Always check your accounts directly online.
- If you're told there's a security issue with your account, contact your bank directly to check.
- Ignore threatening calls saying you'll be cut off, fined or even jailed if you don't send money immediately via Zelle. Legit organizations don't do this. But if you're worried, again contact the utility or other organization directly to check.
- Make your accounts more secure by using a second code or password to access your account. And never give this to anyone, no matter who they say they are. We covered this in issue #637: How to Easily Enhance Your Password Security.
- Try to limit Zelle sending or receiving Zelle payments to people you know or those you have thoroughly checked out.
- Never refund money without first checking that it's truly in your Zelle account.
- If you have the Zelle payment app installed on your phone, make sure the device is always locked when not in use.
- Don't let someone else use your phone unless you know them, or you can watch them all the time. And if you lose your phone with the Zelle app, notify the company and your bank immediately.
A final note: Although we've focused on Zelle scams, users of some other digital payment apps are also vulnerable to these tricks. We covered some Venmo scams in issue #913: Venmo Mobile Cash Users Targeted by Scammers + Coronavirus Scams Update.
Zelle also offers guidance on scams here: Understanding Fraud & Scams.
This Week's Scam Alert
Tech support trick: The long-established tech support scam, where crooks gain access to victims' PCs by pretending to be from Microsoft, has taken a nasty turn. Instead of saying your PC is infected, the scammers say there's evidence your financial accounts have been compromised and advise victims how to "safely" transfer their money to cybercurrency accounts. You can probably guess where it really goes - to the crooks!
Time to conclude for today -- have a great week!