PSA - Zelle Scam

[Kings over Queens]

Sharing as a public service message and warning. I knew better and didn't fall for it, but could see where someone else might.

For those that don't know Zelle is an automated electronic money transfer process used by many banks and that allows people to send money or request money. The transfer is immediate and not reversible. Participants are identified (registered) with Zelle through their cell phone number and/or email address.

Now to the scam attempt.

A few weeks ago I received an email from my bank asking me to accept a $1.00 payment from someone we will call "Mary" for the sake of the thread. Now this is common where zelle users will send a small transaction first to confirm the identity of the recipient and that they are the true intended party. Very common. Since I didn't recognize the person (Mary) who wanted to send me money, I logged into my bank and declined the request marking it as fraud in the notes. THAT was my only mistake, because once I acknowledged the contact, Mary knew she had a live party on the other end.

Exactly one week later I received an email from my bank at 10:18PM confirming a $115 deposit from Mary then a phone call immediately after that from Mary and 2 or 3 texts from her telling me that she'd accidentally send $115 to my cell number via Zelle, and if I wouldn't mind returning it. It was after 10 and I was asleep and missed all of this unfold in real time. The timing of the event is relevant to the scam by the way.

Woke up the next morning seeing all this activity, and ignored it, figuring Mary would call back, or text again. I did google Mary's name and phone number and the results returned to a real person, but still I was suspicious. After 2 days the money is still in my account and no contact from Mary. At that point I sent a secure/direct message to my bank to let them know of the potential fraud. A day later I spoke with a rep and they agreed it was likely fraud, and they would remove the deposit from my account. Haven't heard a word since.

Where is the scam? Since the transfer is immediate, and can't be reversed by zelle, once the money is sent it's gone. Mary, the bad actor transfers it from an account she hacked to her own account, and poof. Why Mary doesn't just clean out the account she hacked is a question I can't answer, that part is confusing. The bad actor uses urgency (calls and texts) and the lateness of the hour (confusion and stress) to influence the target into returning the money. I'm sure had I answered the call the night before I would have been bombarded with additional requests.

Take aways. Don't answer calls from numbers you don't recognize (not always feasible), don't respond to random Zelle requests, they will expire on their own. Finally, don't be pressured. Trust your gut.

 

[engineernerd]

Found an article about this exact scam: Someone I don’t know deposited $500 to my Zelle account — is there any harm in just keeping it?

The takeaways from my linked article were (1) DON'T send the money as asked, and (2) DON'T treat the money as your own.

It's acceptable to do nothing and wait to see if/when the bank reverses the transaction, but better to report the transaction to your bank as either fraudulent or in error (you don't know which) and let them handle it from there.

 

[MichaelB]

“For those that don't know Zelle is an automated money transfer process used by many banks and that allows people to send money or request money.“

It may be a nit, but Zelle is not automated. It requires the sender to request, authorize and submit. This is an important distinction because it is the basis for bank custodians to refuse compensation for some cases of fraud.

 

[Kings over Queens]

“For those that don't know Zelle is an automated money transfer process used by many banks and that allows people to send money or request money.“

It may be a nit, but Zelle is not automated. It requires the sender to request, authorize and submit. This is an important distinction because it is the basis for bank custodians to refuse compensation for some cases of fraud.

Automated meaning uses automation. Automated doesnt have mean automatic, right? I can change it to electronic for others who cant resist picking a nit.

 

[jimbee]

Don't use Zelle. Fixed.

 

[gauss]

I have had friends want to send me money via Zelle / Venmo etc. I looked at all those terms and conditions that I would need to accept to do this and balked.

I said why can't you just use your banks bill pay service instead? You won't have to write a paper check or get cash...

Maybe they like to see all their transactions in one place.... Not going to let them make that my problem.

-gauss

 

[audreyh1]

I’ve never used Zelle to receive money. I’ve only used it to pay a maintenance business. It’s a verified link. I much prefer that to writing a physical check.

 

[jazz4cash]

I can never figure these things out How is it you declined a $1 deposit but $115 gets deposited without you authorizing.

 

[audreyh1]

I can never figure these things out How is it you declined a $1 deposit but $115 gets deposited without you authorizing.

Great question!

 

[JoeWras]

I'm pushing off Zelle and Venmo as long as possible. At least once a day people post this scam on the r/scams reddit. It is pervasive.

I rarely exchange money with friends. As a matter of fact, I can't remember the last time. We're going to have a yard sale this summer. It will be cash only.

 

[frank05]

I said why can't you just use your banks bill pay service instead? You won't have to write a paper check or get cash...


-gauss

In most cases, especially to individuals, the bill pay service results in a paper check that is mailed and can be stolen. Some banks like BoA have a service that you can direct transfer money to another person’s account if they also have an account at that bank.

I use Venmo most of the time but like Zelle, you must make sure you have the correct email/phone number. It is best you copy/paste the number from a text message or from the email to avoid issues. When I pay a vendor by Venmo, I have them text message me from the number they want to use for payment.

 

[mrfeh]

Used zelle to pay rent a few years ago. Use venmo/paypal for exchanging money with friends/family.

Clearly if you get an email/text from somebody you've never heard of, your default position should be that it's a scam.

 

[Dalton]

The only normal instances I need to pay an individual in cash, is gifting my sister's kids for B-days and holidays, so hadn't put much thought into it. But last month, I took responsibility for the Air BnB rental for a short group trip I take with some friends every year. One asked if I take Zelle, so he wouldn't need to go get cash... I had seen it as a menu option on my online banking, but never explored to figure out what it was, how it works, etc. My friend helped me through figuring it out, including some of the warnings and tricks, and I felt better because he has experience using it, and it worked out nicely. Money goes straight into my account, so no messing with going to the bank, or even making a photo check deposit. And my phone auto recognizes who it comes from by comparing against my contacts list (and there's an option when setting zelle up that I can feed it the contacts I choose and it will check to see which if those numbers have a zelle account, and adds a symbol in the contacts list).

So, it definitely has limited use with trusted individuals, but I think it's more universal (and not as 3rd-partyish as the CashApps and ApplePays, and Venmo and Paypal...I shut down my Paypal account since I so seldom used it and get so many phishing fraud emails relating to Paypal) as the banks clearly support it, being tied directly through my bank, so fingers crossed.

I don't know how the scam in OP is supposed to work. I'm pretty sure he didn't reject the $115 transfer because he a) recognized that he shouldn't have acknowledged the first $1 transfer (which signalled it was a valid number with an attached Zelle account), and b) he was reporting it, so let the bank/service deal with nixing it their preferred way.

 

[three putt]

I use Venmo all the time between family and friends. I have a contact list with those I transfer money to regularly and if it is a "one off" type of payment, I ask that person to send me a request for the money. But as the OP pointed out, there are scams out there and you have to be careful. I am more hesitant to send a check in the mail these days due to a couple of people we know who had their checks "washed". If we do mail anything, we go inside the post office to drop off the letter, never a blue box outside.

 

[JoeWras]

In most cases, especially to individuals, the bill pay service results in a paper check that is mailed and can be stolen. Some banks like BoA have a service that you can direct transfer money to another person’s account if they also have an account at that bank.

Yes. And the non-profit I volunteer with had bill pay checks stolen from the mailbox.

I was also a treasurer for a different non-profit and we'd get bill pay checks that sometimes didn't have enough information on them.

Bill pay is very good for large companies that have ACH.

All that said, these services like bill pay, DAF distributions, and so on are trying to get the small business they serve to go fully electronic due to all these check washing shenanigans.

 

[Kings over Queens]

Don't use Zelle. Fixed.

Yes, avoidance is a sold risk management technique. Makes it difficult to transfer money instantly, but I get it.

 

[Kings over Queens]

I can never figure these things out How is it you declined a $1 deposit but $115 gets deposited without you authorizing.

Great question!

It's the way their system works

Clearly you'd want to authorize a debit from your account, right?

I don't have an issue with the ease of having my kids, as an example, sending me money to cover their cell phone or share of the costco or discover bills at the end of the month.

 

[TripleLindy]

Similar thing happened to me a couple of weeks ago. I received a .03 deposit in my PayPal account from an unknown person. It certainly seemed fishy, as the first name was spelled phonetically but not the way you’d normally see it. There’s no way to reject the transaction in PayPal, so I reported it as fraud. Got a response from PayPal that they didn’t find anything suspicious, which was disappointing considering the amount. Then, a week or so later, PayPal reversed the transaction. Pretty weird, but nothing has come of it. I’ve been keeping an eye on PayPal and the linked bank account.

 

[engineernerd]

About this scam:

Apparently the scam works this way: the scammer sets up a Zelle account using a stolen credit card, and uses the stolen card to send money to someone like Kings over Queens. Then they change the credit card in their new Zelle account and try very hard to get Kings over Queens to send that amount of money back to them. If they succeed, they immediately move the money somewhere else so the banks/Zelle can't access it any more.

The article I read didn't explain why they do it this way. Could be that credit-card cash advances have better fraud prevention than Zelle does, and these people want cash, not stuff you can buy with a credit card.

About check washing:

I now use a gel pen to write checks I will send in the mail, after reading that that defeats "check washing."

Most mail theft happens at recipients' mailboxes. Our neighborhood has supposedly-secure cluster mailboxes, but recently a bad actor somehow got a copy of the master key, and it took a couple of months for the USPS to re-key all the mailboxes.

 

[audreyh1]

Similar thing happened to me a couple of weeks ago. I received a .03 deposit in my PayPal account from an unknown person. It certainly seemed fishy, as the first name was spelled phonetically but not the way you’d normally see it. There’s no way to reject the transaction in PayPal, so I reported it as fraud. Got a response from PayPal that they didn’t find anything suspicious, which was disappointing considering the amount. Then, a week or so later, PayPal reversed the transaction. Pretty weird, but nothing has come of it. I’ve been keeping an eye on PayPal and the linked bank account.

I only use PayPal for purchases. I don’t have a bank account linked, only credit cards. I assume that review of the transaction still got escalated at PayPal.

 

[TripleLindy]

i only use PayPal for purchases. I don’t have a bank account linked, only credit cards. I assume that review of the transaction still got escalated at PayPal.

That’s a good reminder. I linked the bank account a few years ago when I sold something on eBay. No need to have the account linked any longer.

 

[audreyh1]

That’s a good reminder. I linked the bank account a few years ago when I sold something on eBay. No need to have the account linked any longer.

Yeah, I had DH clean up his as well. He did a lot of selling way back in 2004/2005 when we were getting rid of house stuff.

 

[gauss]

In most cases, especially to individuals, the bill pay service results in a paper check that is mailed and can be stolen. Some banks like BoA have a service that you can direct transfer money to another person’s account if they also have an account at that bank.

I use Venmo most of the time but like Zelle, you must make sure you have the correct email/phone number. It is best you copy/paste the number from a text message or from the email to avoid issues. When I pay a vendor by Venmo, I have them text message me from the number they want to use for payment.

Ok thank you for that. I could see a fear of stolen checks causing some to avoid that form of payment.

When i have had that happen to me, the banks have always made me whole as I believe they are required to do if there is no fraud involved on the part of the check writer.

-gauss

 

[audreyh1]

In most cases, especially to individuals, the bill pay service results in a paper check that is mailed and can be stolen. Some banks like BoA have a service that you can direct transfer money to another person’s account if they also have an account at that bank.

I use Venmo most of the time but like Zelle, you must make sure you have the correct email/phone number. It is best you copy/paste the number from a text message or from the email to avoid issues. When I pay a vendor by Venmo, I have them text message me from the number they want to use for payment.

In my experience only 2 of many regular monthly checks are still mailed from BofA billpay and these are monthly utility bills.

When I linked our exterminator via Zelle (through BofA), he gave name his business phone number and BofA immediately identified the business and individual so I knew it was going to the correct place. And the recipients are saved, so I’m very comfortable paying.

 

[Sue J]

I use Zelle often but only to and from our sons. We get takeout dinner with son #1 and he sends us his portion via Zelle. Or Son #2 buys tickets to an event and we Zelle him our ticket costs.

We used to do this kind of thing with PayPal but Zelle is instant to the bank account where PayPal involves transferring to your bank. This works well for us but be very cautious. I'm only using it for people I actually know. Sometimes they are in the same room as us!