What are Zelle scams?
Zelle scams are any type of financial fraud that uses the popular payment service Zelle as its main target. They can involve simple fraudulent activities such as fake “for sale” listings on online marketplaces. Zelle scams can also be very sophisticated where the scammer impersonates your bank via email or text messaging. This type of scam might lead to identity theft, which could then allow them to drain your funds via your Zelle account.
How do Zelle scams work?
Zelle scams work by taking advantage of how easy Zelle is to use. Because the funds are transferred instantly when using Zelle, the scammer can immediately withdraw the money, which makes it difficult to ever retrieve the funds after the scam has taken place. Scammers take advantage of this difficulty to create many scams that target Zelle and its users. However, other payment apps are also susceptible to scams, such as Venmo scams or PayPal scams.
10 common Zelle scams
Understanding how Zelle scams work can help you avoid being a victim. These are the 10 most common Zelle scams:
1. Account takeovers
Zelle account takeover scams can take many forms, but the goal is to obtain control of your account so the scammer can send your funds to another account they control.
Zelle takeover scams usually involve the scammer having already obtained personal information about you, such as your name, phone number, or email address. They then use this information to trick you into giving them passwords or account login credentials so they can take control of your Zelle account.
Account takeovers almost always start with a fraudulent text message or email informing you of some problem with your Zelle account. The email or text will appear to come from your bank or Zelle and will include a link for you to click on.
For safe online banking, you never want to click on any link in a text message that appears to come from Zelle. If you do receive a message like this, always call your bank or credit union directly and ask if there is an account problem.
2. Marketplace scams
Online marketplaces such as Facebook or OfferUp have become popular with scammers because these services give them access to many potential victims.
Fake buyers
If you’re selling on an online marketplace, a scammer may contact you to buy your item. They’ll offer to pay via Zelle and then ask for your email address. However, they use your email address to send a phishing email. This email can be used to obtain your account credentials or trick you into paying money to “upgrade” your account, which is another type of scam.
Seller scam
The seller scam is more traditional type of P2P fraud. The seller will post an item that they don’t have. When buyers contact them, the seller will request money via Zelle. Generally, the scammer will try to make you feel as though you must pay in advance. For example, the scammer pretends they have other buyers and they can hold the item if you pay in advance via Zelle.
To avoid Facebook Marketplace scams, never pay for an item on a marketplace in advance. Once you send money via Zelle, you have very little recourse to get your money back.
3. On-the-street scams
While most Zelle scams take place via text messages or email, this one happens face-to-face. This type of on-the-street scam generally takes one of two forms.
Asking to borrow your phone
Someone on the street or at an event will tell you that their phone has a dead battery or they left their phone at home. They will then ask if they can use your phone to call someone. Usually, they claim it’s for some sort of emergency.
When you give them your phone, they quickly look for banking apps such as Zelle and try to send themselves money. They disguise their activity as if they are calling or talking on the phone.
Asking to exchange Zelle for cash
The other form of this scam is if someone in public asks you if you have Zelle. If you say yes, they offer to send you money via Zelle and then you can give them the equivalent in cash.
Once you go to open your app, they try to have you hand them your phone so they can enter their information. Once you hand over the phone, they simply transfer money to themselves now that your Zelle app is already opened.
The key to avoiding these types of Zelle street scams is to never hand your phone to a stranger for any reason. If they need immediate assistance, offer to call emergency services for them.
4. Romance scams
Romance fraud has increased along with the popularity of dating apps and social media. With Zelle romance scams, a criminal will reach out to someone online or through a dating app. They’ll use fake information in their profile, including a fake name, address, and profile photo.
Once the scammer builds trust, they will claim they have encountered an emergency and need money immediately. This is where the use of Zelle enters the scam. The scammer will claim they can’t receive money through other means and have to use Zelle.
With romance scams, it’s also very hard to retrieve your money since you willfully sent the money and your account wasn’t hacked. To avoid romance scams, be careful when you share information via dating apps. Also, do not buy any Steam cards, other gift cards, or various gifts for these people.
5. Investment scams
Zelle investment scams are a type of confidence scam. The scammer will use fake credentials and other materials to convey their expertise in investing and business. The scammer will then tell you that the investment opportunity they are offering requires an immediate downpayment via Zelle. Usually, they claim this is to hold your spot due to the popularity of the investment.
Once you make the initial payment via Zelle, the scammer will move on to the second part of the scam where they falsely claim your investment has already grown substantially. The scammer then requests an additional transfer via Zelle to keep the investment success going.
To avoid Zelle investment scams, never use Zelle to fund an investment or purchase a financial product. No legitimate investment firm or financial advisor will request funds via Zelle. Also, check with your local and state government to confirm the salesman or financial advisor possesses the credentials they claim to before considering investing any money.
6. Refund scams
Zelle refund scams are particularly devious as they target people who have already been the victim of a different Zelle scam. If you were the victim of a Zelle scam, the scammer likely has your contact information. For this scam, they will contact you pretending to be from Zelle and offer to help you retrieve your funds.
However, the entire process just causes you to lose even more money after they walk you through an elaborate and fake refund and return process. You can prevent refund scams by only working directly with your bank, Zelle, or law enforcement after you’ve been scammed.
7. Charity scams
With charity scams, the scammer will pose as a charity organization and solicit donations. This is generally done using some high-profile recent event, such as a flood or earthquake. The scammer will then solicit donations to aid those impacted by the natural disaster. However, scammers simply steal the money.
To avoid this scam, only deal with legitimate charities. Legitimate charities will always offer alternative safe ways to pay. If they insist on using Zelle payments, it’s a serious red flag that something is wrong.
8. Business account scams
Business account scams, sometimes also called Zelle upgrade scams, involve a fee to “upgrade” your Zelle account. These are often combined with marketplace scams and target sellers of high-value items.
Let’s say you place an expensive item for sale on an online marketplace. A scammer will contact you and offer immediate payment for the item via Zelle. They will then claim they can’t send the money because your account isn’t upgraded to a “business account.” The scammer then sends you a fake text message or email pretending to be from Zelle instructing you to upgrade your account to a business account. The instructions involve paying an upgrade fee, which goes to the scammer’s account.
You can avoid this scam by never paying any type of upgrade fee for Zelle. Zelle does not charge extra for businesses using the service, nor does it charge for upgraded services or account features.
9. Employment scams
Zelle employment scams involve fake job listings or work-from-home opportunities. The scam will usually involve a short and simple application process for a job. Once you go through the application process, the scammer will say you need to pay for training or educational materials related to the job. They may also offer a free laptop or computer to perform the work — all you have to do is pay shipping and insurance. They then request payment for these things via Zelle. However, there is no job and the scammer simply runs off with the money.
To protect yourself from Zelle employment scams, don’t ever send payments to apply for a job or send money after being accepted. No legitimate employer will ask that you pay them money just to start working. This is especially true if they insist you must pay via Zelle only.
10. Impersonating family and friends
With this scam, the criminal will pretend to be a family member or friend. They’ll use information from social media or other platforms to make the scam more convincing. They will then contact you via text or email and say they’re in an emergency and require money via Zelle. These scams can be difficult to detect because people are often emotional when hearing about a friend or family member in distress. They immediately send money without giving it a second thought.
Recently, scammers have been using AI technology to replicate the voices of individuals. Scammers use these fake AI voices to leave voicemails asking for money.
You can avoid these impersonation scams by carefully inspecting a message before sending payments to a family member or friend. You may also want to consider setting up a code word with your family that you can use in emergencies to confirm identities if they ever need emergency money via Zelle.
How to avoid Zelle scams
Some payment scams can be very convincing, especially when they prey on certain emotions. However, following a few best practices can help you to avoid falling victim to these growing Zelle scams.
- Never give passwords or login credentials to anyone: Your bank or Zelle will never ask for your passwords or other account information. If someone asks for this info, they are likely a scammer.
- Always contact your bank or Zelle directly: If you receive a message about your account or notice unauthorized payments, never reply via text or an email link. Call your bank or Zelle directly to resolve any issues.
- Only send money to people you know and trust: Zelle should only be used for sending funds to family or friends. Zelle doesn’t offer buyer protection, so only honor payment requests from people you personally know and trust.
What to do if you become a victim of a Zelle scam?
Even the most cautious among us can still become a victim if we let our guard down for a moment. If you do fall victim to a Zelle scam, take the following actions so you have the best chance of recovering your lost funds.
- Contact your bank immediately. Zelle operates as a partner with your bank. If you are scammed, contact your financial institution directly and report the issue.
- Change your passwords. If you’ve been scammed, the scammer may have compromised your other accounts. Change your banking, Zelle, and email passwords immediately. It’s also wise to change any password for apps or services you use for storing online credit card details.
- File a police report. Filing a police report may help you when dealing with your bank so that you can retrieve your funds.
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