Impostor scams were ‘rampant’ on popular payment app. Now, you can get your money back
Impostor scams were the most reported scams in 2022 and led to the second highest reported loss amount in the United States. Now, a policy change one payment service made means impostor fraud victims who made a payments through its system should be able to get their money back.
Consumers lost $2.6 billion to impostor scams in 2022, according to the Federal Trade Commission, with 762,598 reports.
An October 2022 report from Massachusetts Sen. Elizabeth Warren’s office, citing data from four banks, found fraud and theft were “rampant on Zelle,” and that banks weren’t “repaying the vast majority of cases where customers were fraudulently induced into making payments on Zelle.”
Zelle is a peer-to-peer money transfer app, according to Investopedia, launched in 2017 to compete with PayPal, Venmo and Cash App. The service’s network operator, Early Warning Services, is owned by seven major banks: Bank of America, Capital One, JPMorgan Chase, PNC Bank, Truist, U.S. Bank and Wells Fargo.
Warren’s report found Zelle users lost around $440 million through fraud and scams in 2021.
Zelle updated its policy in June to require its 2,100 banks and credit unions to “reimburse consumers for qualifying impostor scams. The change ensures consistency across our network and goes beyond legal requirements,” a spokesperson said in a statement to McClatchy News. The news was first reported by Reuters this week.
What’s a qualifying impostor scam? The spokesperson said it includes “when a scammer impersonates a bank to trick a consumer into sending them money with Zelle.”
Federal law already requires banks to reimburse customers for unauthorized transactions.
Reuters reported the policy marks a shift from 2022 when bankers told lawmakers concerned about the increase in scams that it wasn’t reasonable to require refunds when customers were tricked into approving a transaction.
The new policy includes a mechanism that lets banks claw back money from a recipient’s account to return it to the customer rather than reimbursing, Reuters reported, as well as a tool that flags money transfers with risky characteristics. That might include an account that’s never used the Zelle network before.
“Zelle has driven down fraud and scam rates because of our prevention and mitigation efforts implemented across our network of banks and credit unions,” the spokesperson said. “From 2022 to 2023, we’ve seen more than 99.9% of Zelle transactions reported without fraud or scams.”
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