Greg's Corner

Why is Zelle being used in a shut-off scam important?

A few months ago, we published a blog post entitled ‘Will Zelle replace gift cards in online scams?‘ In that post, we wondered if the payment app Zelle would become the new currency of scams, replacing the old standard of gift cards. The reason we wondered this was not just because of the increased use of Zelle by scammers, but also because of the limited protection Zelle offers its users.

Typically, when we post about a Zelle-related scam, it’s because a scammer used Zelle to empty a victim’s account while posing as their bank’s fraud department. You can read more about that scam here. However, we’re seeing Zelle being used more and more in other scams, where traditionally the scammers would demand payment in gift cards.

For example, the shut-off scam is one that’s becoming increasingly popular among scammers. This is where a scammer will pose as a victim’s power company and threaten the victim over the phone with termination of service unless they make an immediate payment. Previously, these scammers would make the victim’s pay in gift cards, then Bitcoin ATMs became a popular avenue.

Recently, a mother from Ohio fell victim to the shut-off scam. Instead of the scammer asking for payment in gift cards, they asked the victim to make a payment through Zelle. But the scammers didn’t get her to make just one payment. They got her to make four payments during one phone call.

At first, they told her the Zelle payment didn’t go through, it did. Then they told her that Zelle only accepts whole dollar amounts and got her to make a second payment. She was then told to use a code when making the payment. Again, they told her the payment didn’t go through when it had. Lastly, they informed her that the code must have been entered wrong and instructed her to enter the code in all caps, marking the fourth payment. By this time, her account was drained.

In previous instances like this, many of the banks that offer Zelle, throw up their hands and say that since the victim authorized the payment, it’s out of their hands. The consortium of banks who own Zelle could easily offer better protections for Zelle users, but choose not to.

Much like other payment apps such as Cash App and Venmo, Zelle is only supposed to be used between friends and family. Unless you know someone personally, you shouldn’t pay them through Zelle. No legitimate company will ever ask you to pay bills through Zelle. Also, please keep in mind that no power company is going to threaten you over the phone with a termination of service. Instead, you would receive a warning in the mail before the service is turned off.