Fraud on Zelle P2P (Person to Person) Payment System [pdf]

Fraud and theft are rampant on Zelle – and are increasing. The four banks that reported the relevant data received scam and fraud claims in excess of $90 million in 2020, and are on pace to receive scam and fraud claims in excess of $255 million in 2022.

Banks are not repaying the vast majority of cases where customers were fraudulently induced into making payments on Zelle. Overall, four banks that provided data reported over 190,000 cases of scams – cases where customers reported being fraudulently induced into making payments on Zelle – involving over $213 million of payments in 2021 and the first half of 2022. In the vast majority of these cases, the banks did not repay the customers that were defrauded. Overall the three banks that provided full data reported repaying customers in only 9.6% of scam claims, and repaid only $2.9 million, representing 11% of payments.

Banks are not repaying customers who contest “unauthorized” Zelle payments – potentially violating federal law and CFPB rules. Zelle claims to have a “zero liability policy” for cases in which a bad actor gains access to a consumer’s Zelle account. But the data provided by the banks revealed that they reimbursed consumers for only 47% of the dollar amount of cases in which customers reported these unauthorized payments on Zelle in 2021 and the first half of 2022.