How To Avoid Zelle Scams, And What To Do If You Can’t | Smart Change: Personal Finances
Zelle is a peer-to-peer payment network used by over 1,000 banking apps. Like other P2P services, Zelle makes it easy to send money to friends and family using their email address or phone number. But as convenient as it may be for you, it’s also convenient for scammers who want your money.
Zelle has been in the news recently because criminals are taking advantage of the platform to scam people into sending them money. Banks and credit unions are not liable for money lost to P2P scams because people knowingly make a payment themselves, unlike fraudulent transactions resulting from stolen credit or debit cards.
With Zelle, “your options for recourse are very limited,” says Akeiva M. Ellis, co-founder of The Bemused, a financial literacy consulting firm for young adults, and an ambassador for the Certified Financial Planner Board of Standards Inc. at outside Boston.
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Here are some tips to keep your money safe when using Zelle or any other P2P payment app, and what to do if you get scammed.
1. Try using Zelle to pay friends and family only
Reserve Zelle and other money transfer apps to pay people you already know and trust, says Robert Burda, chief strategy officer and interim CEO of nonprofit Cybercrime Support Network , whose work includes operating the non-profit organization FightCybercrime.org as a resource for victims. “Once the payment is sent, like cash, it’s gone,” he says.
When using money transfer apps, use your registered phone number and email address. Be suspicious if someone you’ve communicated with (and whose contact details you know) asks you to send the money to another phone number or email address. It’s a sign that their account may have been hacked, Ellis says.
2. Raise a red flag on urgent payment requests
“In general, scammers often create a sense of urgency,” says Alexis Castorina, consumer education manager at Zelle, based in Scottsdale, Arizona. Before making a payment, especially if you’re feeling rushed, think about it to see if it’s legitimate.
Someone could pretend to be from a company you do business with (like your utility company) and threaten to cut off service if you don’t make a payment immediately. These sense of urgency and fear tactics are red flags, Castorina says.
3. Be careful if a service provider asks for money through Zelle
Beware of unexpected communications claiming to be from your bank or other service provider, says Ramona Maior, CFP in the Phoenix area. Email addresses and phone numbers on caller ID can be ‘spoofed’ or faked to look like they’re from your bank, for example, so don’t be fooled by what appears about your caller ID or what an email sender’s name looks like at a quick glance.
If the person claiming to be from your utility company or bank requests payment using a P2P service rather than your regular payment method, let them know that you will be calling the company yourself to handle it. Find the official phone number and contact us to confirm if you really owe money and how you should send it.
4. Beware if someone insists on only using Zelle
“When people really insist on using Zelle, that’s a red flag for me too,” Ellis says. If the person claims that the payment options are Zelle or nothing, that’s a sign to do some research to make sure the person and the transaction are legit.
What to do if you are the victim of a P2P payment scam
Despite your best efforts, scams are so widespread and ever-changing that you may not be able to avoid one. Here are the steps to follow if a scam happens to you.
Report the scam
“We want individuals to contact their financial institution immediately,” says Castorina. “They can then investigate further to see exactly what happened.”
Zelle app users can also report the scam to Zelle by calling the company’s customer service number or filling out a contact form on the company’s website.
It’s a good idea to report the scam to FightCybercrime and the FBI. It helps prevent other people from getting scammed, provides information that could be the missing piece of a larger scam or trend, and helps advocate with lawmakers for better consumer protection, says Burda.
Learn the warning signs to look out for when using P2P services. ScamSpotter.org and government sites like MyMoney.gov offer information on how to keep your money safe.
Being scammed can make people distrust others, Castorina says. Counseling or peer support can help people not feel isolated in their experience.
Zelle and other P2P services are some of the best ways to send money. But because funds are transferred directly and quickly to recipients’ accounts, and transactions don’t have the same consumer protections as credit or debit card fraud, it’s critical to use them securely.