Consumers have lost millions to scammers who are using Zelle as a highway to steal

KISSIMMEE, Fla. — A Kissimmee woman claims scammers stole $2,500 from her checking account when she transferred money using her bank’s mobile payment app, Zelle.

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Despite her fraud claim, the bank had not refunded her money, so she called Action 9.

“This address was going to be their home?” consumer investigator Todd Ulrich asked Karla White as he pointed to the document.

“Yes,” White replied.

At first, White was thrilled. She thought a man who claimed to be a local real estate agent had found a rental home for her friends, an elderly deaf couple who had just been forced out of their apartment by an increase in rent.

White volunteered to use Zelle, a mobile payment app linked to her Bank of America account, to transfer the couple’s $2,500 deposit for the rental home.

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“In this area, it’s so competitive. It’s almost like you have to act quickly to secure a place,” White explained.

Then she received an email asking for an additional deposit. White became suspicious.

It turned out scammers spoofed a legitimate agent’s website and included pictures of the house, tricking White into thinking it was an available rental.

“When I contacted the owner, he said the house wasn’t even for rent,” White said.

She contacted Kissimmee police to make a formal fraud report, before she asked Bank of America for a refund.

“Did you think you were protected?” Ulrich asked.

“I did,” White replied.

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White said she was told by Bank of America that an investigation could take months and that there were no guarantees she would get her money back.

“So, at this point, your refund has been denied?” Ulrich asked.

“Pretty much, yeah,” White said.

This year, Action 9 attempted to help four consumers who were burned by scammers after they used Zelle to transfer money, but had their banks reject their fraud refunds.

A woman whom Action 9 interviewed in January was able to get a $10,000 refund after she contacted Ulrich.

Several months ago, the U.S. Senate banking committee heard how risky Zelle can be and how hard it is for consumers to make a fraud claim and get their money back.

“Last year alone, Zelle users were defrauded of about a half a billion dollars, that we know of,” Sen. Elizabeth Warren said.

Investigators for Warren found that Zelle fraud and theft were rampant. Out of the major banks they reviewed, 9 out of 10 fraud refund claims were denied.

“Unfortunately, we’re hearing more and more instances of fraud and scams,” said Rachel Gittleman, a financial services outreach manager with the Consumer Federation of America.

Gittleman found that many banks denied fraud claims because the consumer had authorized the payment. In such cases, credit card users would be protected. Consumer groups think mobile cash app users deserve that same right.

“It’s about applying an existing law to these newer products that weren’t in existence when that law was created,” Gittleman explained.

Ulrich contacted Bank of America. A spokesperson said the bank is now working directly with White. However, the spokesperson said that since she authorized the payment, they cannot guarantee a refund will be issued.

“The other thing I don’t trust is that these banks have your back,” White said.

Federal regulators are considering new rules to protect mobile payment app users. Until then, research and verify anyone you’re going to transfer money to before you hit send.

Bank of America told Ulrich it tells all customers how to spot fraudulent transactions.

Action 9 also contacted Zelle about these issues but so far, there has been no response.

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