What Is Zelle? How Do Zelle Scams Work?
Zelle is a peer-to-peer (P2P) payment app that lets you send quick money transfers between known bank accounts.
Most Zelle scams involve an unsuspecting Zelle user transferring money to another (unfamiliar) user for a promised product or service.
After a near-instant cash transfer, the recipient disappears without holding up their end of the bargain. Victims of these scams have a much harder time getting refunds unlike other types of scams that involve unauthorized transactions.
In an article published in March of this year, The New York Times retold Bruce Barth’s scam story after a thief stole his phone to transfer $2,500 from Barth’s Zelle account.[*] Thanks to The Times’s intervention, Barth eventually got a refund.
But not all victims receive sufficient recourse. Zelle’s immediacy hinges on connecting your bank accounts or debit cards directly to the payment service. This is also why it’s nearly impossible to cancel a digital payment once it’s on its way.
In this guide, we’ll share why Zelle scams are on the rise, the eight most common types of scams, and how you can protect yourself.
Eight Ways That You Can Get Scammed on Zelle
Unfortunately, Zelle scammers are getting more sophisticated with new ways to fleece their victims. While some of these scam tactics might be novel, most of them follow tried-and-true patterns.
1. Money mule scams
Geyerman almost paid her scammer $1,900 for an enticing job offer. These job scams usually unfold this way:
- The candidate applies for a “lucrative work-from-home job” online.
- A “hiring manager” reaches out, usually via Messenger, Telegram, Skype, or text message.
- All subsequent communications tend to be exclusively through text messages.
- The “hiring manager” extends an offer to the candidate, but there’s a catch. The candidate is asked to front money or deposit a check, usually in the guise of purchasing work equipment.
- It always ends the same way — with candidates still out of work, and no means to get their stolen money back.
Here’s what to do:
- Be wary of any job for which the entire interview process takes place through text messages. Legitimate jobs usually require at least one phone call or in-person interview.
- Legitimate jobs don’t require you to pay for your own equipment.
- Never give your Zelle account information — including your phone number or email — to unknown individuals.
2. Zelle transfers to yourself
When Illinois woman Demi Woods made a $3,500 Zelle transfer to herself, she thought she was canceling an alleged fraudulent transaction.[*] Woods’s money never reached her personal account; fraudsters spoofed a caller ID and Zelle account to steal from her.
Here’s what to do:
- If you suspect you’re on the phone with a scammer, hang up.
- Never share your bank or Zelle account authentication codes with anyone.
- Don’t send money to yourself via Zelle to “reverse unauthorized payments.”
3. Account upgrade scam
Spoofing is a type of phishing scam in which the scammer is deliberately impersonating a company and/or installing malicious software at the same time.
Jiaming Chong — a Bank of America customer — tried to sell his camera online, only to lose $4,200 in the process. Chong needed to make a $1,000 upgrade on his buyer’s account. A phishing email purporting to be from Zelle was requesting this payment in gift cards.
Here’s what to do:
- Know that Zelle will never solicit money via emails or phone calls.
- Verify that the sender’s email address is from an official domain.
- Look for signs of phishing — questionable grammar and a tone of forced urgency are some tip-offs.
4. Bank impersonators
Smishing is a form of phishing in which scammers send text messages purporting to be from reputable companies, usually banks.
The tactics that scammers use in smishing scams closely resemble phishing or spoofing schemes. Most smishing text messages claim to either flag “a suspicious login” or a “suspicious purchase.”
If you respond or click on a link in the text, you will most likely receive a call from a bank representative impersonator.
California woman Cynthia Marin didn’t suspect a scam when she replied “No” to a fake Wells Fargo text message.[*] She hadn’t approved a Zelle transaction to "TRAVIS" for $3,500. Marin was later misguided into transferring $1,000 to a spoofed Zelle account in her name.
💡 Related: Beware of These 7 Wells Fargo Scam Texts →
5. Account takeovers
Account takeover fraud (ATO) is exactly what it sounds like — a scammer gets access to your Zelle account, changes the password, and locks you out.
- Account takeovers usually unfold the same way as phishing, spoofing, or smishing scams wherein the victim clicks on a phony login link.
- This gives scammers access to your account.
- Then, they change your password and other account details to lock you out of your account.
- Since the locked-out account is still connected to your bank account, you’ll be the one footing the bill for the scammer’s spending spree.
Here’s what to do:
- Only enter your Zelle login credentials on the official Zelle app or website.
- Send a $1.00 transfer to confirm that you’ve reached the intended recipient prior to making larger transfers.
6. Zelle scammers on Facebook Marketplace
- In this scam, the alleged buyer responds to a listing on Facebook Marketplace, asking if the item is still available. This usually happens within a couple of hours after the listing goes up. The scammer often pretends to be a senior citizen who isn’t very tech-savvy.
- They ask for your phone number or email address to send you the money on Zelle.
- You may then receive a phishing email from a Zelle lookalike domain. “ZelleSupport@gmail.com” is an example.
- These emails typically prompt you to pay to upgrade to a Zelle business account. You may even be asked to pay via a link in the phishing email.
Here’s what to do:
- Ask for the recipient’s Zelle email address — not a phone number. Spotting typos in email addresses is easier (and more obvious) than identifying incorrect digits in a phone number.
- Remember that you don’t need a Zelle business account to make and accept payments on Zelle.
- Don’t use Zelle for commercial transactions.
7. Refund and recovery scams
If someone bilked you, scammers know you will be desperate to get your money back. Refund and recovery scams take advantage of your already vulnerable state by charging for bogus services.
Like a Kansas City man who thought he was speaking with a U.S. Bank representative,
- You may receive a call out of the blue flagging a fraudulent Zelle transaction from your bank account.
- The caller purports to be from your bank and even offers evidence such as a seemingly legitimate caller ID.
- They then walk you through an elaborate, fake Zelle refund process. You inadvertently end up paying the scammer to reclaim funds you never lost in the first place.
Here’s what to do:
- If you’re not convinced you’re speaking to a bank representative, hang up and call the official number on the bank’s website.
- Be wary if anyone demands upfront payment to “recover” your lost funds or account access.
8. Craigslist scams
Overpayment and rental scams may be the two most common scams on Craigslist. An elderly Colorado couple knocked on Jesscia Puzio’s door wanting to tour her duplex. Puzio wasn’t renting and neither had she posted a Craigslist ad the couple claimed to have responded to.[*]
The scammer had persuaded the victims to sign a phony lease and even pay a hefty security deposit. Since most peer-to-peer payment apps (like Zelle) offer instant, irreversible transfers, they’re an obvious choice for scammers.
- If rental scams pressure you into paying advances for a listing that’s too good to be true, overpayment scams operate differently.
- An “interested” buyer may contact you about the item you’re selling on Craigslist.
- When the buyer pays you with a certified or cashier’s check, you notice it exceeds the sale price.
- They then urge you to deposit the check and wire back the overpaid amount.
- By the time the bank flags the counterfeit check, you’ve lost the sale item and the overpaid amount.
Here’s what to do:
- Look up the bank account, address, and phone number for the bank name displayed on any check you receive. Call the bank’s official phone number — not the one listed on the check — to confirm.
- Turn down checks made out to an amount larger than what you discussed. If the buyer insists that you return any overpayments using apps like Zelle, it’s a scam.
💡 Related: The 6 Latest Rental Scams To Watch Our For →
Why Are These Scams on the Rise?
Zelle transfers are near-instant and irreversible
- If the person you’re sending money to is also a Zelle user, the payment can’t be canceled.
- Zelle — like Venmo or Cash App — was designed to transfer money between family and friends, not unknown users. This is why Zelle uses the Automated Clearing House (ACH) payments system to expedite transactions.
Zelle connects directly to your bank account or debit card
- Unlike its competitors, Zelle is owned by Early Warning Services (EWS) — a fintech company run by seven of the largest banks in the United States, including Bank of America, Wells Fargo, and JPMorgan Chase.
- Money transfers require little more than tapping on the Zelle integration on a participating bank’s mobile app.
- If your bank doesn’t integrate with Zelle, the standalone Zelle app will initiate transfers as long as you connect a Visa or Mastercard debit card.
Banks haven’t been liable for unauthorized EFTs via Zelle
- Until recently, there were no consumer fraud protections for seemingly authorized online banking on third-party payment apps.
- Issued under the Electronic Fund Transfer Act (EFTA), Regulation E previously offered little recourse to victims who made misguided transactions.
- In June 2021, however, the Consumer Financial Protection Bureau (CFPB) clarified that if consumers were duped into sharing account access information, they should receive the same consumer protections as if the money were acquired from a stolen debit card or other banking access device.[*]
Can Your Bank Account Be Hacked Through Zelle?
Because Zelle’s roots connect to the largest banks in America, Zelle is fairly safe from hacks. Most Zelle scams boil down to scammers fraudulently inducing victims to transfer money or share account details.
According to Nishank Khanna, chief marketing officer at Clarify Capital,
"Zelle is safe because it uses data encryption which offers users increased protection. From a privacy perspective, it's safer than alternatives, like Venmo and Cash App, since it's harder for scammers to access users' personal information."[*]
Want To Report a Zelle Scam? Here’s How
- If you signed up for Zelle directly through Zelle, immediately call their customer support team at 1-844-428-8542.
- For unauthorized transactions through a participating bank, contact the bank’s fraud department.
- Also submit a report with the FBI’s Internet Crime Complaint Center.
- If your financial institution or credit union denies redressal, file a complaint with the CFPB.
How Do You Avoid Zelle Scams? [8 Steps]
The best way to protect yourself is by only exchanging money on Zelle with people you trust. However, if you need to use it in other situations, here are some precautions to consider.
- Opt to make transactions with your Zelle email: Unless you know the sender (or recipient), choose to make transfers with an email connected to Zelle.
- Set up two-factor authentication (2FA): The process of having to authenticate through your computer and a text message (or authenticator app) makes it much harder for a scammer to breach your account. Never share these single-use codes with anyone.
- Recognize signs of social engineering: Most scammers work by trying to establish rapport and build trust with their victims. Overly friendly, dramatic, or romantic solicitations should be red flags.
- Question “urgent” deadlines or payment requests: Don’t let immediate deadlines or frightening consequences misguide you into paying a scammer.
- Regularly check your credit report and bank statements. Scammers are almost always after your financial accounts. Check for the warning signs of identity theft — such as strange charges on your bank statement or accounts you don’t recognize. An identity theft protection service like Aura can monitor your credit and statements for you and alert you to any signs of fraud.
- Double-check requests from unknown recipients: Since payments between two Zelle users can’t be canceled, make sure you are sending payments to the right person. Making a $1.00 test transfer is one way to make sure you’re reaching the intended recipient.
- Switch to non-bank, peer-to-peer payment apps: Venmo, for example, lets you make payments with a connected credit card at a 3% fee. Recovering lost funds is a much simpler process with a credit card company.
- Consider identity theft and credit monitoring services: Services such as Aura offer near real-time fraud alerts, online account monitoring, and powerful antivirus software. If you are going to use Zelle with your bank account, Aura will flag suspicious transactions including those beyond your spend limit. Try Aura’s 14-day free trial for immediate protection while you’re most vulnerable.
Zelle Payments May Be Fee-Free But Not Fraud-Free
Zelle can be a free, fast, and easy way to send money to people you trust. But, when you use it for buying and selling items online, you open yourself up to more risks. Protect yourself and your bank account from Zelle scammers by following the tips outlined in this article.
To safeguard your money from Zelle scammers, avoid commercial payments, and never send funds to unknown recipients. And to keep your bank account and identity safe, sign up for Aura.