Zelle is free to use, convenient, and can be linked to accounts at more than 2,100 banks and credit unions, but like other peer-to-peer payment apps does not offer the same strong fraud protections as paying with a credit card.

In most cases, Early Warning Services, the consortium of seven banks that owns Zelle, has reimbursed customers for losses resulting from unauthorized transactions from their accounts. But it consistently has refused to help scam victims who were tricked into using Zelle to pay con artists—since they had “authorized” the transactions.

Earlier this year, Early Warning quietly expanded its fraud protection policy to include some victims of imposter fraud. As of June 30, 2023, banks and credit unions offering Zelle “must reimburse consumers for qualifying imposter scams, including when a scammer impersonates a bank to trick a consumer into sending them money with Zelle.”

In a statement announcing the new rules, Zelle said it was doing this to “improve the consumer experience and address the dynamic nature of fraud and scams.” The company noted that the change “goes beyond legal requirements.”

Checkbook asked Zelle which imposter scams qualified for the new reimbursement protection. Early Warning would not provide specifics, but a company representative said cases where criminals impersonated “certain trusted entities,” such as banks and well-known companies, would qualify. The representative said customers should understand that the policy update “is not carte blanche for all imposter scams.”

Consumer advocates, who have been urging all peer-to-peer payment apps to provide more fraud protection, and lobbying federal regulators to require it, welcome Zelle’s updated policy, but they want Congress and the Consumer Financial Protection Bureau to continue working on rules that will protect all users of peer-to-peer payment platforms.

John Breyault, a vice president at the National Consumers League, which operates Fraud.org, called Zelle’s policy change a “long overdue first step” toward the goal of making peer-to-peer payments safer for consumers. But he added that “voluntary action by the big banks is no substitute for strong consumer protection regulation.”

Susan Weinstock, CEO of the Consumer Federation of America, wants Early Warning to be transparent about the limitations for reimbursing victims of imposter scams. The assertion that only “certain trusted entities” are covered by the new policy “does not ensure that consumers will receive fair redress for these scams,” Weinstock said.

Early Warning says that more than 99.9 percent of Zelle transactions did not result in a fraud report from 2022 to 2023. Based on the value of payments handled by Zelle that year, the amount sent to scammers would total $629 million.

As Checkbook has warned in the past, peer-to-peer apps should only be used to send money to family, friends, and others you know and trust. This is not a safe way to buy merchandise or send money to anyone you do not personally know.

Criminals who pretend to be with a trusted bank, retailer, or government agency try to get their victims to use peer-to-peer apps because once the money is transferred, it’s nearly impossible to reverse the transaction.

This imposter fraud has spiked in recent years. It’s now the most-reported scam to the Federal Trade Commission with losses of $2.6 billion in 2022.

More Info from Checkbook: Complaints Against P2P Payment Apps Soar


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Contributing editor Herb Weisbaum (“The ConsumerMan”) is an Emmy award-winning broadcaster and one of America's top consumer experts. He has been protecting consumers for more than 40 years, having covered the consumer beat for CBS News, The Today Show, and NBCNews.com. You can also find him on Facebook, Twitter, and at ConsumerMan.com.