Report: Zelle scam refunds are rare — what to know

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As scams and fraud have grown on the Zelle payment app, banks have been reluctant to refund customers for lost cash, according to a recent report by the office of Sen. Elizabeth Warren of Massachusetts.

Zelle says on its website that you can typically get a refund for money lost in unauthorized transactions, but that you may not get a refund for losses from transactions you’re tricked into authorizing (scams). The report from Warren’s office says that in either situation, banks rarely give refunds, possibly in violation of federal law and regulations.

Key takeaway: If you use Zelle or other peer-to-peer payment apps, your best bet is to know how to spot and avoid scams — and to report any fraud or scams quickly.

Beware of common scams

Warren’s report states that the banks her office studied aren’t providing refunds in 90% of cases where customers were tricked into making payments on Zelle.

Look out for swindles like these:

  • Impostor scam. Someone pretending to be a representative from a bank, utility or government agency demands payment for a fine or overdue bill. To resolve the issue, you’re asked to cover the payment using Zelle. 
  • Seller scam. A stranger offering anything from concert tickets to cute puppies requires that you pay with Zelle. You pay but never see the sale item delivered.
  • The “Pay Yourself” scam. Offering to stop alleged fraud, someone pretending to work for your bank urges you to send money to yourself using Zelle and — with your help to reset your banking password — enrolls their bank account with Zelle. Now the money you thought you were sending to your bank account is actually going to the scammer’s account.

How to protect your money

When using a peer-to-peer payment app, you’re unlikely to get your money back if you send it to the wrong person — even if you can prove it’s a scam.

Take a safety-first approach:

  • Send money only to those you know and trust. P2P transactions are fast and often irreversible, so always verify the recipient’s information by checking the mobile phone number or email address before you make a payment. If the recipient is enrolled with Zelle, you cannot cancel a payment once you send it.
  • Treat payments like cash. Money zips into a recipient’s bank account within minutes, according to Zelle. Remember: If you authorize a payment, you can’t cancel it as long as the recipient is enrolled.
  • Watch for phishing calls and emails. If you’re contacted by someone who says they’re from a company or government agency, do your own research to find an official number or website before you consider replying. And be wary of links in suspicious-looking emails and texts. Links may contain harmful code that could infect your smartphone.

What to do if you’ve been duped

When you report scams, you help law enforcement and government agencies root them out.  

File a complaint with …

  • Your bank or financial institution. If you think you’ve been scammed or defrauded, contact your bank immediately. Under the Electronic Fund Transfer Act, also known as Regulation E, banks are required to repay customers if money is illegally taken out of their accounts without authorization. Just keep in mind that whether you’ll be paid out will depend on the facts of your case.
  • Government agencies. If you paid a scammer with a mobile payment app, report it to the Federal Trade Commission at You may also want to report scammers to the FBI’s Internet Crime Complaint Center.
  • Zelle. You can report Zelle scams (transactions you’re scammed into authorizing) on the payment app’s website — Zelle says it will report your info to the recipient’s financial institution to help protect others from getting scammed. For unauthorized transactions, Zelle asks that you call (844) 428-8542.

About the author: Brad Hanson is a senior editor at Credit Karma. His 30 years of experience in print and digital media includes work for the Los Angeles Times-Washington Post News Service, and Polyvore. Most recently before… Read more.