Unexpected Zelle payment? Here’s what you need to do to avoid trouble
CFPB sued Zelle and major banks over $870M in fraud losses. Learn how scammers exploit payment apps and how to protect yourself from new schemes.
Scammers are always coming up with new tricks, and if you use Zelle or other payment apps, it’s critical to be aware of one of the latest ways bad actors are exploiting these platforms.
In 2024, the Consumer Financial Protection Bureau (CFPB) sued Zelle and three major U.S. banks “for failing to protect consumers from widespread fraud on America’s most widely available peer-to-peer payment network.” The lawsuit was filed under the Biden administration, prior to the CFPB being gutted by the Trump administration, and the current status of the case remains unclear.
The CFPB accused Bank of America, Wells Fargo, and JPMorgan Chase of rushing to create a competitor to Venmo and Cash App, ultimately putting their own customers at risk and costing them at least $870 million in fraud-related losses over the seven years since Zelle’s launch. The agency’s lawsuit also alleges that once fraud was reported by customers, the banks “failed to properly investigate complaints or provide consumers with legally required reimbursement for fraud and errors.”
No updates on the status of the lawsuit have been reported since the initial announcement in December was made.
Scams using Zelle remain active
Recently, reports have surfaced of unsuspecting users receiving payments—sometimes as much as $500—from unknown senders. A simple mistake, perhaps? What’s the harm in keeping the cash? Well, as Will Kenton of Moneywise explained, a few problems can arise. First, the money “could disappear just as suddenly as it appeared, especially if it was tied to fraud.” If you spend the funds instead of reporting the error, you could end up in the red—or even facing legal trouble, warned Kenton.
How you can be left holding the bag
Even worse than spending money that wasn’t meant for you is unknowingly becoming part of a scam, where both you and another individual could lose out.
Security analysts are increasingly seeing scammers create accounts on apps like Zelle or Venmo using stolen banking information—credit cards being a likely target. The scammer then selects a second victim and sends them money from the stolen card. Moneywise warns that the scammer may then message you, claiming it was a mistake and asking you to send the money back. However, in the meantime, they’ve changed the banking info on the account to their own. So if you “return” the funds, they won’t go back to the original card—they’ll go straight to the fraudster.
How can you get in trouble for this? When the credit card holder reports the fraud, the platform flags the transaction and reverses it. That leaves you with little recourse to recover the $500 you sent back to the scammer.
If you receive a payment from someone you don’t know, report it to the platform as soon as you realize. If the sender sends you a message, don’t respond and report that contact as well.
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