Criminals cheat cell users. Here’s how to keep your money safe

The free payment app Zelle is very popular as it allows users to transfer money between bank accounts directly and for free. But the popularity of Zelle — a collaboration between Capital One, JP Morgan Chase, and other top banks — has also made it a prime target for fraud.

Stories of Zelle users who have lost thousands of dollars to money transfer scams continue to make headlines.

In an April 26 letter, Senate Banking Committee members Sens. Elizabeth Warren and Robert Menendez, both members of the Senate Banking Committee, questioned Zelle’s parent company, Early Warning Services, “to what extent Zelle allows fraud and what steps your company is taking to increase consumer protections and help users.” to recover lost funds.”

Read on to learn how cell works, how criminals use it to scam consumers, and what to do if you’re a victim of cell scams.

What is cell and how does it work?

Cell is a peer-to-peer (P2P) payment service developed by a consortium of major US banks including Bank of America, Chase, Capital One and Wells Fargo. It charges no fees and works with nearly 1,500 banks and credit unions.

Designed to compete with other electronic payment services like PayPal, Venmo, and Cash App,zelle allows banks to process occasional electronic transfers without paying fees to third parties. Customers whose banks do not support cell can connect a debit card to the cell app.

Last year, people sent $490 billion via cell, more than double Venmo’s $230 billion, the New York Times reported.

Cell allows users to send money electronically to anyone: all you need is a recipient’s email address or US phone number to send money. Transactions are instantaneous and irreversible once completed, making cell very attractive to criminals.

What happens in a cell scam?

Most of the reported cell scams are pure Social Development: Manipulating people with fraudulent information and scaremongering. Scammers use false claims and representations to trick people into unknowingly authorizing money transfers.

A common scam is an email or text message asking a user to confirm a large, fake cell payment. If the user replies that they didn’t authorize the transfer, the scammer follows up with a phone call pretending to represent the bank and spoofing the financial institution’s phone number. They guide the caller through bogus instructions on how to reverse the unauthorized claims, which actually wire money to the criminals instead.

Another popular scam starts with a message claiming that your bank account has been compromised and you need to take immediate action to resolve the issue. If you respond, the scammers will follow up with a phone call, posing as your bank and walking you through the money transfer process.

In addition to posing as your bank, scammers can also pose as institutions such as utility companies. A woman in Lorain, Ohio was threatened with cutting off power by someone posing as her electric company, who then asked for cell payments to keep the power running.

Former Major League Baseball first baseman Keith Hernandez nearly fell for the same utility scam. He was targeted by a scammer claiming to represent Florida Power & Light:

How can I protect myself from cell scams?

Since most cell scams are socially engineered, there are specific steps you can take to avoid them.

Do not respond to unsolicited text messages or emails.
This advice applies to all suspected scams, not just cell-related ones. If you get a message saying it’s from your bank but you didn’t contact them first, don’t reply. Instead, call your financial institution directly to inquire about your account and possible security issues.

If there are no problems with your account, you can also report this to your bank phished. If you gave up personal information as a result of the phishing attempt, you can work with your bank to protect your account

Watch out for “urgent” deadlines or requests from new recipients.
When someone says you need to take immediate action to solve a financial problem, alarm bells should start ringing. Scammers use fear tactics and a sense of urgency to panic you and make you less likely to think critically. The utility scams in the section above told users that they only had 30 minutes to act before their electricity would be cut off.

If you notice suspicious behavior from someone claiming to represent your bank, utility company, or other organization that demands prompt payment, hang up immediately and call the company directly.

Also, be warned about any bank, corporate, or utility request for new cell payments, especially if you’ve never paid for them through cell before. If you’re receiving cell phone payment requests, contact the organization directly through their official website or phone number for more information.

Never give anyone your two-factor authentication code.
Two-factor authentication (2FA), also known as multi-factor authentication, adds an extra layer of security to your accounts. Each time you log into your account, you will receive an additional one-time password, usually delivered by email or SMS, which is valid for 30 to 60 seconds.

Once you set up 2FA for your bank accounts, never Share your one-time passwords with third parties. Criminals posing as your bank or utility can pressure you into giving them your passcode for many false reasons, but real institutions will never ask you for it.

Only use cell for transfers to people or businesses you know and trust.
If you make a payment with cell, you may not be able to get the money back if you have been scammed by falsely authorizing the payment. Although Zelle offers a convenient and easy payment service, limiting usage to people you know personally reduces your risk of being scammed.

Cell app on a smartphone

Last year, 490 billion US dollars were transferred via cell.

SOPA images

What should I do if I’ve been scammed by a Zelle scam?

First, contact the financial institution involved in the transaction immediately. This allows the company to start the investigation as soon as possible. Because of Cell’s instantaneous nature, you should react quickly.

According to many local reports, banks were reluctant to reimburse losses from cell phishing scams because the transactions were actually approved by the account holders. Several recent victims only had their money returned after news reports of their scams pressured the banks to do so.

In June 2021, the Consumer Financial Protection Bureau clarified its position on required compliance by banks with the Electronic Fund Transfer Act of 1978, also known as Regulation E. The CFPB says that “if a third party fraudulently lures a consumer into sharing account access information,” that consumer should enjoy the same protections as if the money had been obtained from a stolen debit card or other banking “access device.”

The EFTA also includes an important reason to report your cell fraud immediately. The law requires consumers to notify their bank of loss or theft within two business days for full protection.

Note that the CFPB’s guidelines only protect consumers who are unknowingly tricked into transferring money.

If your bank refuses to reimburse you for a Zelle scam, your only option (other than running your story to local media) is to file a complaint with the CFPB.

For more information on fraud protection, visit best identity theft protection and monitoring services and learn more increasing fraud on social media. Criminals cheat cell users. Here’s how to keep your money safe

Chris Barrese

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