Secure Transactions: Avoiding Scams on Apps Like Zelle

Zelle and Peer-to-Peer Payment Apps (P2P) Scams

Author

The Grandkids
August 21, 2024

Newsletter Topics: Zelle and Peer-to-Peer Payment Apps (P2P) Scams

šŸ—žļø In the News: The Wall Street Journal recently reported that regulators have begun investigating how major U.S. banks handle customer funds on the peer-to-peer payment (P2P) app Zelle. This scrutiny comes amid growing fraud and scam activities happening via Zelle.

What is Zelle? Zelle is a digital payment service that lets users send and receive money quickly using their bank accounts. Itā€™s integrated into many banking apps for instant transfers as Zelle is owned by Bank of America, Capital One, Chase, PNC, Truist, US Bank, and Wells Fargo.

Why do scammers love Zelle? Zelle is not only popular but also very easy to use. Money is sent by simply typing the recipientā€™s phone number or email address. Once a transaction occurs, it is difficult to reverse, especially if the scammers have impersonated someone elseā€™s phone number or email address.

šŸ‘€ Todayā€™s Focus: What are the most common Zelle (or any other peer-to-peer services) scams?

  1. Impersonation Scams: Scammers pretend to be someone you know and ask for money urgently via Zelle, using a fake email or phone number.

  2. Fake Seller Scams: Fraudsters create fake ads or online stores, then ask you to pay for items through Zelle and disappear once they get the money.

  3. Phishing Scams: Scammers send fake emails or texts pretending to be from Zelle or your bank, asking you to log in through a phony link to steal your information.

  4. ā€œAccidentalā€ Transfers Scam: You get a payment from someone you donā€™t know. Theyā€™ll say it was a mistake and ask you to send the money back. What they donā€™t tell you is that the money was stolen. If the P2P app later finds out the money was stolen, you could be held responsible and might have to pay it back or face a ban. If you receive money by mistake, contact the P2P appā€™s customer service for help.

šŸ˜Ž Grandkid Tip of the Day:  How can you protect yourself from Zelle (or any other peer-to-peer services) scams?

  1. Avoid Paying with P2P Apps for Products or Services.

    • Donā€™t get us wrong Zelle is great for specific transactions, but if you are buying a service or a product push to pay with a Credit Card. Ideally, you should only use Zelle (or any other peer-to-peer service) to send money to people you know and trust. In our last issue, we discussed the benefits of paying with a Credit Card, such as Chargeback Rights and Payment Protection that protect you as a consumer.

    • Here is an excerpt taken from Capital One policy:

      Banks do not protect payments made through Zelle, unlike the protection offered for payments made with credit cards.

  1. Apply the AAE Mindset:

    (A) Assume it is a potential threat:

    • Is there a clear and valid reason for this payment request via a peer-to-peer payment app? Can I pay with a Credit Card instead?

    • Does this payment request make sense in the context of my relationship with the sender?

    • Am I being pressured to act quickly or without verifying the details?

    • Did the payment request come via email or text? Have I called the requester and spoken to them via phone to verify that it is legitimate?

    (A) Assess the source:

    • Have I checked that the payment request comes from a verified source and not an unknown user? Is the phone number correct? Is the email address correct?

    • Have I reviewed the transaction details and recipient information carefully before sending any money?

    (E) Engage if everything checks out. 

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