Zelle 'scam' reveals the need for consumer responsibility

| by Will Hernandez
Zelle 'scam' reveals the need for consumer responsibility

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Where is the sense of personal responsibility?

That's what I asked myself after I read a report from TechCrunch about consumers falling victim to a scam that involves Zelle, the mobile person-to-person platform backed by the biggest banks in the U.S.

The scam itself is straightforward.

A Craigslist user reaches out to a seller on the marketplace to buy something like concert tickets. The seller, in turn, asks the buyer to complete the transaction via Zelle, which the victim apparently is unaware exists. 

The buyer, which believes Zelle is legit (and it is) to use because it's backed by their bank, transfers the funds through and never receives the tickets. 

Meantime, the seller closes the bank account and disappears into the night.

The victim then turns to Zelle and the banks to reimburse them for authorizing what was technically a legit, but shady purchase to begin with. Come on, it's Craigslist!

Again, where is the sense of personal responsibility?

Over the course of 10 years covering the banking and payments industry, I've sat in on countless conference panels that discussed fraud, security and consumer protections. I've even moderated one for my company. 

One of the points always brought up is how consumers also need to be diligent in protecting themselves. Banks and retailers can only do so much, and we know how many consumers have "1234" as a PIN or part of a password. 

The issue with this particular scam is whether the banks behind Zelle should be responsible for the poor choices consumers make with their money. And the answer is no, especially when it involves something as scam-ridden as Craigslist. 

There's a reason why sports teams, for example, urge fans to purchase tickets on officially recognized third-party marketplaces should they go that route. And ticket marketplaces, such as StubHub, have buyer protections in place should something go awry. 

A good friend of mine ran into this situation a couple of years ago when he bought a ticket to a Rangers hockey game in New York City. 

When he arrived at Madison Square Garden for the game, he was denied entry because the ticket had already been scanned. He was unknowingly duped. 

After the game, he reached out to StubHub and explained the situation. It did its due diligence and investigated the situation and found that my friend indeed had been scammed. StubHub refunded his purchase in full.

Craigslist offers no such protections, though it has a whole section on avoiding scams. "Do not extend payment to anyone you have not met in person" is the top warning. And this is where that sense of personal responsibility comes into play.

Yes, those consumers who were scammed were right to believe Zelle is a legit payment method because, well it is. But not for that situation.

Scams are more of a thing now than ever before, and burgeoning and popular payments instruments can be at the center of such crimes. 

Green Dot for years has fought against the fact that its MoneyPak prepaid cards are used in various scams that unfortunately involve elderly victims. Such scams continue to this day and the company has done everything it can to warn consumers about them.

Can Zelle and the banks do a better job of making it clear that the service is intended to be used with trusted friends and family? Absolutely. It doesn't hurt for it and the banks to make that crystal clear in all marketing materials.

TechCrunch noted in the article that Zelle, like Venmo, doesn't offer fraud protection for its buyers and sellers. The author, Sarah Perez, wrote that Venmo makes it clear that the service is intended for use between trust family and friends. 

She wrote that Zelle doesn't make it as clear as Venmo. However, Zelle does drive home that point in its national TV marketing campaign.

But keep in mind that it's not like Zelle and the banks don't have anti-fraud measures, which are separate from any consumer scams.

"Our anti-fraud efforts are focused on implementing multi-layer and multi-factor authentication during the enrollment process to prevent bad actors from accessing the network," Lou Anne Alexander, group president of payments at Early Warning (which is behind Zelle), told me in an emailed statement. "These efforts complement what we are doing 24/7 to monitor account activity and take action against fraud or potential fraud once anomalies are detected."

Alexander also added how Early Warning will continue to work with banks to promote "safe digital banking behavior" to customers.

One aspect of this I'm sure the banks will look into now is how quickly customers can open and close accounts after a flurry of suspicious looking Zelle transactions. And if they weren't thinking about that, you're welcome.

But ultimately at the end of the day, the onus is on the consumer to be vigilante in doing business with someone on a platform such as Craigslist.

Zelle and other mobile P2P platforms are meant to be used with trusted recipients, not some randos on the internet. Consumers need to do better. 

Topics: Mobile Banking, Security, Trends / Statistics

Will Hernandez

Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of, he spent two years as the content manager for, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.

View Will Hernandez's profile on LinkedIn

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