Zelle has become a popular choice for online money transfers due to its simplicity, zero fees, and support from over 1,700 banks. However, since its launch in June 2017, the peer-to-peer payment service has been plagued by fraud. On December 20, 2023, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Early Warning Services, the consortium of banks that owns Zelle, alleging that it “failed to safeguard the Zelle network from fraud and other defects, which resulted in hundreds of millions of dollars in consumer losses.”
Zelle allows users to send money instantly using only a recipient’s phone number or email. While convenient, these irreversible transactions have made Zelle a prime target for scammers. In 2023, Zelle processed $180 billion in transactions in the first quarter alone, underscoring its widespread use.
Fraudsters primarily rely on social engineering, tricking users into authorizing payments.
- Fake Payment Alerts: Scammers send messages pretending to confirm large transactions and then follow up with calls impersonating bank representatives.
- Account Compromise Claims: Victims are pressured into transferring money under the pretense of securing their acc
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