METRO ATLANTA – People use apps like Cash App, Venmo and Zelle every day, but consumer advocates say Channel 2 Action News they are seeing a meteoric rise in the number of these apps being used to withdraw money directly from bank accounts.
Ashli Lincoln learned that there is virtually no consumer protection for victims in this situation with one app in particular: Zelle.
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There is fraud protection in some cases, for example if money was withdrawn from your account at an ATM without your knowledge, but in cases where Zelle is used to commit fraud, victims have to face to loss.
A metro Atlanta woman Lincoln spoke to, who did not want to be identified, said thousands of dollars were withdrawn from her Chase bank account using the Zelle app.
“It’s definitely fraudulent. It’s a scam,” she said. “Honestly, it’s kind of gross.”
Last February, she said thieves posed as representatives of the bank’s fraud department.
“(They had) my social security number, so they had everything, so it’s clearly my bank,” she said.
They were claiming to help stop fraudulent activity on his account, but in fact they were trying to get his personal information to trick him into sending money from his Zelle account.
Clark Howard, Channel 2 Consumer Advisor said scams involving third-party cash payment apps have reached a fever pitch.
“The ugly, ugly, ugly events involving Zelle continue on and on,” Howard said. “The scams that steal your money through Zelle will continue to morph.”
This month, Howard warned consumers on his podcast that unlike checking, savings and cash accounts, there’s no fraud protection when it comes to apps like Zelle.
“It’s much more dangerous to use than the already dangerous Venmo or Cash app,” Howard said. “Zelle is married at the hip to your bank account, and if a criminal is able to tap into the money in your account through Zelle, the money is gone forever because the banks were able to stop any action regulations or laws enacted that would give consumers normal protection.
Howard said it happened more frequently because the criminals knew about it.
Last spring, Natalie Lieberman had $15,000 stolen from her Bank of America account using her Zelle account.
“It made me feel incredibly vulnerable and exposed,” she said.
Howard said they can get your money easily. You will receive a fraud alert SMS confirming a Zelle withdrawal from your account. Then you will receive a call from a number using spoofing technology that has the same caller ID as your bank.
In some cases, they obtain personal information to access your Zelle account, and in others, users send them money directly.
“And the steps they do are the opposite of allowing a criminal to use Zelle to drain all the money from your bank account,” Howard said.
Howard says the best protection a consumer can do is to simply deactivate their Zelle accounts linked to their banks.
“Chase raises his hand and says, ‘We can’t do anything,’ saying, ‘We can’t control Zelle and we can’t control if they do this,'” he said.
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Lincoln discovered that this affected not only Chase Bank customers, but several other banks as well.
She discovered that Bank of America had the highest number of victims linked to this scam, and Wells Fargo is right behind them.
Currently, Bank of America is the only bank offering fraud protection in these cases.
Zelle sent Channel 2 Action News a statement saying:
“To confirm, Zelle® does not hold the funds. We provide messaging between financial institutions. Our partner financial institutions handle all registration and payment issues with Zelle® in their mobile app.
“Informing and educating consumers continues to be a priority for us, and we will take all necessary measures to protect our customers. As noted, we partner with financial institutions, educational non-profits, and the media to educate consumers about all forms of digital payment scams. Here is some context:
- EVERFI: Through a strategic partnership with EVERFI, the leading social impact education technology company, we provide free financial education to consumers through modern banking courses and consumer protection resources. In addition to the class, Zelle® representatives present teacher and administrator conferences throughout the year, helping to educate teachers about fraud and raise awareness of common scams targeting teens.
- Cybercrime Support Network: The partnership with this non-profit organization includes several grassroots marketing initiatives to raise awareness and educate consumers and small businesses on how to avoid financial fraud and scams.
- VOX Media: As part of its ongoing Pay it Safe initiative, Zelle® has partnered with award-winning explainer studio Vox Media to develop a new campaign titled The science behind the scams. The campaign features “educational” creatives, including video, audio, social media and an interactive quiz to help consumers learn more about common scammers’ tactics and ways to avoid falling in love with them.
- Zelle® Financial Education Center: A section on zellepay.com provides resources on financial education, safety, and other learning materials, including links to consumer advocacy resources from the FTC, CFPB, and other credible sources.
“As part of National Consumer Protection Week (March 2022), we launched a campaign – created in partnership with influencers, media and experts in their field – to present daily information on the most scams. widespread and help consumers avoid them.
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