Greg's Corner

Zelle scams hit seniors the hardest

By Greg Collier

For nearly two years, Zelle-related scams have persisted, affecting countless users who rely on this popular peer-to-peer payment app. Despite its widespread adoption and backing by major banks, the platform has become a fertile ground for fraudsters, exploiting vulnerabilities and leaving victims with little recourse. As the financial toll mounts, concerns about the app’s security and consumer protection measures continue to grow.

A senior citizen living in Western Pennsylvania, with a disability and on a fixed income, was recently swindled out of over $1,400 through unauthorized transactions on Zelle, a cash app backed by America’s largest banks. As his financial stability is threatened, he echoes a sentiment that many fraud victims share, accountability should not fall on the victim.

The issue of digital payment fraud has caught the attention of Congress as Americans report losing a staggering $10 billion through Zelle fraud in 2023 alone. One senator has described Zelle as the “dirty little secret” of American banks.

The victim shared his frustration, revealing his bank statements and detailing the five unauthorized Zelle transactions from May. These transactions, ranging from $95 to $639, were debited from his account without his consent. For him, who relies on a fixed monthly income from Social Security Disability, losing over $1,400 is devastating.

Despite disputing these transactions twice with his bank, he was told they were valid. His former bank insists he is liable for the transactions, and the amount has been sent to collections. This burden is nearly as much as his entire monthly disability check.

Zelle, operated by the nation’s seven largest banks, is the most used peer-to-peer payment app, with transactions that are fast and, unfortunately for victims like him, permanent. Some lawmakers have criticized the banks for not doing enough to protect consumers.

When approached about this case, the bank declined to comment on individual accounts but reiterated their efforts to educate customers on avoiding fraud. Their recommendations included only using Zelle for trusted contacts and safeguarding account login information.

The issue highlights a critical need for better consumer protections in digital finance, especially for vulnerable individuals like this victim. As Congress and federal agencies scrutinize these practices, victims hope for accountability and change in the system that has left them unprotected.