In 2023, payment fraud and investment scams accounted for a large share of reported financial crime cases—a 15% increase from the previous year, according to the 2024 AFP Payments Fraud and Control Survey Report. Technological advancements and innovations have given room for the rapid rise in online payment scams, and fintech companies like Zelle suffer the brunt of them.
Zelle fraud is a growing problem in the online payment industry. There were over 192,800 reported incidents of Zelle scams in 2021 and the first half of 2022, and this number is projected to increase in the coming years.
If you’re worried about your financial safety as a Zelle user, there are security measures you can put in place to avoid falling victim to fraud. In this guide, we’ll go over Zelle fraud, the common types to avoid, and the next steps to protect yourself if you fall victim to it.
Is Zelle a Scam? Understanding Zelle Payment Scams
Zelle is an online payment software owned by Early Warning Services that allows you to make swift transactions from your bank account to other users with only an email address or phone number.
Despite the company’s security measures, Zelle remains vulnerable to fraud attacks, leaving many unsuspecting users at the mercy of cybercriminals.
Zelle scams and frauds usually leave victims with financial loss—and the subtle differences between these two crimes may be key in determining whether you can recover your funds after the investigation.
What Is Zelle Fraud?
Zelle fraud is an unauthorized or deceptive use of the platform to transfer money from your account. While often used interchangeably with scam, the company describes fraud as any payment made through a Zelle account that the user didn’t approve or wasn’t informed about.
In simpler terms, Zelle fraud occurs when someone accesses your account and transfers money without your consent.
In cases like these, since you didn’t authorize the transaction, it may be possible to get your money back if you immediately report the activity.
How Do Zelle Scams Work?
Zelle app scams involve your consent to transfer money from your account to another party. It’s an authorized payment, usually following being tricked into paying for a service or product. The scammer typically doesn’t hold up their end of the bargain, and that’s when you realize a scam has occurred.
In 2023, a couple made a Zelle payment to Royal Palace Pool & Spas for a swimming pool costing $31,000, only to discover that they were victims of a Zelle phishing scam. The fraudster pretended to be the company owner via email, and they unknowingly made the transfer to the wrong Zelle account.
In this situation, recovering your money may be more difficult because you authorized the transfer.
Note: Most Zelle scams eventually lead to unauthorized fraud attacks, but not all fraud attacks are scams. For example, if someone hacks your device and steals from your Zelle account without deceitfully contacting you, it’s not a scam.
Common Zelle Scams & How To Avoid Them
There are many ways fraudsters scam using Zelle, from asking for donations to selling fake products or posing as banking agents. Learning about these attacks will better equip you to spot and evade fraudsters who employ Zelle fraud schemes.
These are the most common ones:
- Phishing
- Account upgrade scams
- Online marketplace scams
- Account takeovers
- Money mule scams
- Refund and recovery baits
Phishing
Phishing is a popular scam technique in which the fraudster pretends to be a company or financial institution representative or someone you know to obtain sensitive information from you.
To trick you into sharing your personal information or payment account credentials, the scammer will use different means. They may ask you to submit your details on a fake form that looks like it’s from Zelle or ask you to share your sensitive data through a convincing pretend email.
Account Upgrade
The “Account Upgrade” scam leverages urgency to get you to do the scammer’s bidding. Fraudsters bombard you with emails and alerts, notifying you that your account needs to be upgraded if you hope to continue using it.
The scammer provides a fake but real-looking website where you can enter your account login details or other useful information to give them access to your account. By posing as Zelle, they pressure you to comply by stating your account will be frozen otherwise.
To avoid this, victims may fall for the tactics and input their details, giving the fraudsters free rein over the account.
Online Marketplace Scams
Since Zelle is a popular payment platform for online transactions, scammers abound on major e-marketplaces like Facebook, eBay, and others. In marketplace scams, the fraudsters may contact you asking you to sell an item to them and offering to pay for it through Zelle.
When you give them your Zelle email to receive the payment, they send you a fraudulent payment confirmation email through a fake Zelle email address. You’d then ship the product to the scammers but never actually receive the money.
Other instances involve claiming they overpaid for the purchased item and showing a fake receipt or screenshot to prove it. Fraudsters then ask the victim to send the excess of the fake sum back to their account.
Account Takeovers
Fraudsters can take over your account through different means, such as:
- Stealing login credentials (if you carelessly share them on public platforms)
- Using phishing websites and social engineering scams to get your data
Once they obtain this information, they can easily infiltrate your account and drain funds from your bank before you can recover it or the bank can do anything about it.
The Money Mule
Fraudsters grow their illegal operations by using unsuspecting victims, known as money mules, to move their ill-gotten funds. For example, they contact you through scam job postings, emails, or even social media and trick you into giving them your Zelle details.
This way, you unknowingly become a money mule and entangle yourself in Zelle fraud, which can lead to criminal charges.
Refund and Recovery Baits
Refund and recovery baits are among the most vicious types of scams because they’re a double blow to the victims. Scammers prey on recently defrauded Zelle users by offering to refund them or help them recover the lost money.
Claiming to be a representative from Zelle who handles fund recovery after a scam, the fraudster requests your login details to “process the refund,” but you must pay a deposit to begin the process.
Once you provide the info, they get access to your account, which leads to another scam. Meanwhile, they still get payment for the fake recovery.
How To Avoid Zelle Scams
You can protect yourself from Zelle fraud and scams by incorporating these safety measures:
| Safety Measures | Explanation |
| Verify identities | Ensure that whoever contacts you about a Zelle payment is who they claim to be. Use other channels and sources (not the one the person provides) to verify their identity |
| Don’t fall for pressure tactics | Don’t allow anyone to pressure you into sending your sensitive details without first verifying who they are |
| Never share personal financial information | If anybody initiates contact with you asking about your banking information, consider it a red flag. Don’t share financial info with any unverified personnel, even if they claim to be bank representatives |
| Properly research opportunities | Before sending money for any investment, property, product, or program, research it thoroughly first. Look for convincing reviews, references, company history, and evidence of authenticity before proceeding |
| Use a traceable payment option for large sums | When sending a significant amount of money to someone, use a more secure payment platform that can be traced. If the recipient insists that you must use Zelle, they’re likely a scammer |
| Never click on suspicious links | If you receive an unsolicited email from a Zelle representative asking you to enter your banking information via a link, don’t do it. Contact Zelle directly through your app or their contact page to verify any offers or “upgrades” they may be offering |
Does Zelle Offer Protection Against Scams?
One of the reasons many become victims of Zelle fraud is that the platform doesn’t offer fraud protection.
However, due to the multitude of scam-related losses that many users had been experiencing on the platform, Zelle made a small tweak to their user policy in August 2023. This update announced that Zelle would now reimburse users for scam losses on a case-by-case basis, depending on the scam type.
According to a Reuters report, the major type of scam that Zelle typically reimburses is imposter scams—specifically, when the victims are tricked into transferring money to fraudsters claiming to be representatives of the government, a bank, or a well-known service provider.
What To Do if You Fall Victim to a Fraud or Scam Through Zelle
If you fall victim to a Zelle fraud or scam attack, swift action is key to mitigating your loss. These steps will help:
- Report the incident immediately
- Request a chargeback from your bank
- Inform relevant consumer protection agencies
- Move your funds to a safer digital location
Report the Incident Immediately
There are a few hoops to jump through to give you the best chances of recovering your money after a Zelle scam or fraud. Here’s how to file a fraud claim with Zelle:
- Define whether it’s a fraud by Zelle’s standards—According to Zelle’s policy and Regulation E, a fraudulent transaction is one that you didn’t authorize, that was incorrectly transferred electronically, or that was miscalculated by your bank. If any of this applies to your Zelle loss, you can file a claim within 60 days of your last bank statement
- Provide a written statement or contact Zelle—To dispute a fraudulent transaction with Zelle, you’ll need to write a report of events and provide the following details to your financial institution:
- Your account number
- Details of the fraudulent transaction, including how much you lost, the date it occurred, and relevant transaction ID numbers
- The time frame of the dispute, starting from when the fraud occurred to when you informed your bank
- The type of resolution you’re asking for
An alternative to writing a report is contacting Zelle directly for fraud resolution—call 1-844-428-8542 to dispute your claim. Note that it takes 45 days for banks to investigate bank claims.
Request a Chargeback From Your Bank
While Zelle may be unable to help you get your money back, your bank may offer some assistance. Contact the bank’s fraud department immediately and explain that you were defrauded and you want a chargeback.
Provide the relevant details about the scam and allow them some time to run an investigation. To speed things up, or if the bank refuses to comply, you can also report to the Consumer Financial Protection Bureau (CFPB).
Inform Relevant Consumer Protection Agencies
Some federal agencies are dedicated to helping people who have lost their money to fraud attacks to navigate the period. For example, you can log a complaint at the FBI’s Internet crime center, IC3, and report identity theft to the Federal Trade Commission (FTC) at ReportFraud.ftc.gov so they can track the scam.
It’s also a good idea to file a report at your local police department as it can help your case during investigation and fraud dispute resolution. Visit or call your local police department (not 911) and ask them to connect you to their fraud department for the next steps.
Move Your Funds to a Safer Digital Location
If scammers have your account information, the damages to your finances can be brutal. Once you catch a whiff of a fraud attack on your bank account, immediately transfer your funds to a more secure digital banking solution to safeguard your cash reserves. One such solution is a security-first platform like FortKnox.
