A recent investigation report from US Senator Elizabeth Warren’s office revealed that US-based Zelle users lost approximately $440 million to scams in 2021 alone. When victims of scams report the incidents to their banks for help and reimbursement, many banks allegedly choose to ignore them.
Banks are governed by various federal regulations, including Regulation E, which stipulates that banks are only required to cover fraud in cases of unauthorized transactions, such as credit card theft. However, if a person is deceived into making a payment through Zelle, it is considered an authorized transaction, and banks are not mandated to reimburse the victim. Consequently, around 90% of Zelle scam victims do not receive reimbursement from their banks, even upon request.
Senator Warren’s report criticized big banks for not compensating their customers for both authorized and unauthorized fraudulent activities on the Zelle platform, despite claiming that it is secure.
Zelle, on the other hand, emphasized the high volume of legitimate transactions on its platform compared to fraudulent ones. The company stated, “Tens of millions of consumers use Zelle without incident, with more than 99.9% of payments completed without any report of fraud or scam.”
