After a policy change in June, thousands of banks who work with Zelle have started refunding money to victims of imposter scams as the company aims to strengthen consumer protections at the request of U.S. lawmakers and federal consumer watchdogs.
There are 2,100 financial groups that offer money transfer services through Zelle. They began reversing fraudulent transactions on June 30 for customers conned into wiring money to scammers who claimed to be from government agencies, banks, and service providers, according to Early Warning Services, a company that owns Zelle.
“As the operating of Zelle, we continuously review and update our operating rules and technology practices to improve consumer experience and address the dynamic nature of fraud and scams,” said a spokesperson for Early Warning Services in a statement provided to Cord Cutters News. “As of June 30, 2023, our bank and credit union participants must reimburse consumers for qualifying imposter scams.”
While there are a lot of safeguards in place across financial institutions for people targeted by fraudsters who illegally gain access to a person’s account, there are few protections to help people tricked into sending money to scammers. Venmo, the other popular money-transfer service, doesn’t offer any way to get a refund after a payment is sent.
Zelle’s policy changes go “well above existing legal and regulatory requirements,” said Ben Chance, chief fraud risk officer at Early Warning Services.
Zelle is keeping its new imposter scam refund policy under wraps so as not to encourage scammers to take advantage of its new policy designed to protect consumers from malicious actors.
“The new standardized rules are applicable to all 2,100 participating bank brands on the Zelle Network,” said Early Warning Systems. “Our bank and credit union participants must reimburse consumers for qualifying imposter scams, including when a scammer impersonates a bank to trick a consumer into sending them money with Zelle.”
Since the beginning of this year, Zelle has helped educate 13 million consumers about scam tactics through partnerships with the Better Business Bureau, the National Council of Aging, the Federal Reserve Bank of Boston, Her Campus Media, Utilities United Against Scams, and EVERFI.
Later this month, Zelle is launching new educational videos to help consumers learn how to spot and avoid financial scams. Additional information and resources can be found through the Zelle Network, website, social media channels, and partnered financial institutions.
For more information, visit the Zelle Pay it Safe Education Center.