How to avoid getting scammed on Zelle

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Scams have become a big part of the online world. From ransomware to simple phishing scams, fraudsters constantly evolve unique ways to separate you from your money or personal information. If you want to be sure you're protected, always be on the lookout for suspicious behavior, particularly when it comes to payment apps like Zelle.

Zelle is similar to Venmo and other peer-to-peer payment apps with a big caveat. The payment app is supported by a range of banks and financial institutions, allowing users to send and receive money directly from their bank account rather than request transfers. This support provides an additional layer of security, as banks are typically outfitted with robust protections to keep their patrons' money safe.

However, that doesn't mean that Zelle is impervious to scammers. If you want to buy a new-to-you Google Pixel 6 Pro (or something similar) from a local seller and pay with Zelle, keep reading In this guide. We walk you through our top tips for avoiding Zelle scams, explain what to do if you are scammed, and cover a few common scams you should look out for.

Zelle: An introduction

Zelle is a peer-to-peer payment (P2P) app that's available in the U.S. The digital payments network, initially called clearXchange, was created in 2011 by Bank of America, JPMorgan Chase, and Wells Fargo to facilitate digital P2P, business-to-consumer, and government-to-consumer payments. Over the next several years, clearXchange added additional banks and credit unions to its service and announced real-time payments (though some payments could take up to five days to clear).

ClearXchange was sold to Early Warning Services (EWS) in early 2016. EWS is a financial intelligence service that facilitates identity and authentication solutions, along with other fraud prevention services for digital payments. The company is owned by seven of the largest U.S. banks: Bank of America, Capital One Financial, JPMorgan Chase, PNC Financial Services Group, Truist Financial, U.S. Bancorp, and Wells Fargo.

EWS released Zelle, its consumer-focused digital payment platform, in late 2017 and announced it would shut down clearXchange's peer-to-peer platform by the end of the year and replace it with the Zelle app.

Although the Zelle app is available on the App Store and Google Play Store, people who have an account in a participating bank must use the payment system through the bank app. Otherwise, you'll need a debit card with the Visa or MasterCard logo associated with a U.S. bank account.

In late 2022, Elizabeth Warren (D-Mass.), a longstanding member of the Senate Committee on Banking, Housing, and Urban Affairs (BHUA), released a scathing report about the payment app stating "fraud and theft are rampant on Zelle — and are increasing." And in a BHUA hearing, shortly before the reports, Senator Warren said, "New internal data from the big banks shows that their platform Zelle is rampant with fraud and theft, and few customers are getting refunded — potentially violating federal laws and consumer rules."

EWS responded days after the report, stating the Senate's report was misleading and 99.9% of consumer transactions on its platform are processed without any fraud or theft claims. All that said, scammers use Zelle, and there are a few steps you can take to protect yourself.

How to avoid Zelle payment scams

Nothing is worse than getting scammed, especially when it comes to payment apps like Zelle. You can follow a few simple best practices to avoid falling victim to a Zelle scam. They aren't foolproof, but they'll reduce your chances of falling prey to con artists.

Stick to friends and family

Zelle is a P2P payment service. That means you should stick to your peers. Friends and family, whose email addresses and phone numbers you have thoroughly confirmed, should ideally be the only people receiving or requesting money transfers from you. We understand that you may want to use the app to pay for products and services you find on Facebook Marketplace, Craigslist, or other similar services. Still, with few protections in place if something goes wrong, friends and family payments are your safest bet.

Beware of 'urgent' and 'exclusive' requests

Scammers rely heavily on a perceived sense of urgency to defraud everyday users, so you should always be wary of any "urgent" requests that come through the Zelle app. If the requests come with consequences, like shutting off your power or sending your information to the authorities, take this as a red flag that denotes a likely scam. But don't worry. The FBI won't start a file on you if your electric bill is late.

Additionally, be cautious if anyone is insistent about exclusively using Zelle for payment. Because your Zelle account is often attached to your bank account or credit union, scammers will demand payment through the app, so you have no way to get it back. It's not necessarily a dealbreaker, but do your research to be sure the service or product is legitimate.

Set up two-factor authentication

Easy-to-guess passwords have been the downfall of many online users, and the best way to ensure you don't leave yourself open to a password-stealing scam is by enabling two-factor authentication (2FA) on your account. This adds an extra layer of security, ensuring no one but you can access your online banking apps. If you're worried about your password security, a password manager is a good way to make sure you're secure.

Use a different app

Zelle is unique because it allows users to send and receive payments directly into their bank account or debit card. This is why it is so bad for scams, as potential fraudsters get immediate access to the funds without recourse for retrieval. However, other apps like Venmo allow you to connect a credit card to your account, providing additional options for getting a refund when you've been scammed.

The most common scams on Zelle

In 2022, a Pew Research Center study found that 13% of digital payment app users have fallen victim to scams. Even worse, 190,000 cases of fraud were reported among the banks that partially own Zelle between January 2021 and June 2022, according to a report released by Elizabeth Warren. Scams have become uncomfortably commonplace on digital payment apps like Zelle.

Now that you have a foundation of information about how to avoid Zelle fraudsters, it's important to know what kind of scams are out there. Here are a few common scams that use Zelle to steal money from unsuspecting users.

Phishing scams

If you've never heard of the term "phishing," you're a lucky online user. The scam has become increasingly popular, as it's easy to become a victim. The scam involves a fraudster emailing or texting a user as Zelle or another legitimate financial institution. Because of the convincing email or text message, victims will enter login credentials, personal information, and financial data, handing the scammers everything they need to access the user's Zelle account.

Fake invoice scam

Like other payment apps, Zelle allows users to request digital payments from almost anyone. Subsequently, some scammers attempt to request money from users under the guise of a utility company invoice that you almost certainly never solicited. If the user isn't thinking clearly or doesn't want to see a notification go unresolved, they may make the Zelle payment to a scammer that's only after their money.

Refund and recovery scams

If you're worried about Zelle scams, you could be more susceptible to a refund and recovery scam. This scam sees a fraudster making a phone call with a fake caller ID to an unsuspecting user and insisting that a fraudulent transaction has occurred and that the user needs to authenticate their account by providing valuable personal information. There is no fraudulent transaction, and the user just gave that information to someone who will take advantage of it.

Facebook Marketplace scams

Social media is rife with scams, and Facebook Marketplace is no different. This scam typically occurs immediately after a user places an item on Facebook Marketplace. The user will be contacted by someone who's interested in purchasing the item, using convoluted methods to get the user to provide the code to the user's account. Once the user does that, the scammer can access the user's account and send and receive the user's money.

What to do if you've been scammed on Zelle

If you've fallen victim to a scam through Zelle, there isn't a lot you can do to get your money back. The service connects directly to your bank account, and the recourse for recovering those funds is minimal. Still, if you want to make sure this doesn't happen again, there are a few steps you can take to inform the proper authorities and government agencies.

For one, if you use Zelle through your supported U.S. bank like Chase, Wells Fargo, or US Bank, immediately report suspicious activity through the proper channels. In most cases, a phone number on the back of your debit card takes you exactly where you need to go. You'll also want to report the scam to the FBI Internet Crime Complaint Center.

If your bank isn't supported by Zelle and you've been scammed, reach out to the company's support staff to report the suspicious activity. If you authorized the payment, report the scam. Otherwise, call Zelle at 1-844-428-8542 between 10 a.m. to 10 p.m. ET, to report fraud as soon as possible.

Staying safe with Zelle

This guide may have scared you off from using Zelle, but we can confidently say you have nothing to worry about. Yes, these scams are common, but the reality is that being prepared with this kind of knowledge stops most scams in their tracks. A little vigilance goes a long way, and with the bevy of online tools at your disposal, like password managers, you'll fend off even the most advanced scammers without so much as a second thought.

FAQ

Q: What is Zelle?

Zelle is a peer-to-peer payment app used by many U.S. banks and credit unions. The company is owned by EWS, a fintech company that provides fraud and identity theft intelligence to financial institutions and retailers.

Q: How do I sign up for Zelle?

If you have a U.S. bank account, there's a good chance you already have access to Zelle in your bank's app. You may need to activate Zelle through your bank's app by providing your phone number and email address.

If your bank does not support the payment platform, you can download the Zelle apps for iOS and Android to use the service. You must have a debit card with the MasterCard or Visa logo issued through a U.S. bank to sign up for the service.

Q: Is Zelle safe to use?

In 2022, EWS — the company that owns Zelle — stated 99.9% of payments on the app are not flagged for fraud or theft. The company made this statement shortly after the Senate BHUA Committee released a report stating scams and fraud are rampant on Zelle. In March 2023, five Senate Democrats, sent a letter to the FDIC, National Credit Union Administration (NCUA), and the Office of the Comptroller of Currency, asking each to "closely review and examine customer reimbursement and anti-money laundering practices for financial institutions using Zelle. The group also asked the agencies examine EWS on an ongoing basis.

If you believe you've been scammed, you should contact your financial institution if you made the payment using its app. If you made a payment using the Zelle app, you can report the scam on the company's website. You can also contact Zelle directly between 10 a.m. and 10 p.m. ET by calling 1-844-428-8542.