Hackers Drawn to Zelle’s Lack of Protections

Data breaches and fraud are two of the biggest challenges that today’s consumers face in terms of privacy, harm, and inconvenience. Recently there have been concerning reports about a great deal of Zelle accounts being hacked, worrying consumers around the country.

Zelle, a digital payment network operated by banks, is built into banking apps and allows consumers to send money to one another instantly only using a phone number or email address. However, its ease of use has also proven attractive to scammers. Posing as bank representatives, these scammers actors bank to gather information needed to access a target’s banking account through Zelle.

Bob Sullivan, an author focused on online banking scams and a founding member of msnbc.com, told NBC, “it’s a simple proposition: the quicker the transaction is, the quicker a criminal can steal,” Sullivan added. “This is almost engineered for crime.” The ease and speed of Zelle make it an easy target for crime.

All banking websites and apps are vulnerable to hacking, but Zelle’s unique status as a bank-operated and mobile banking application embedded service makes for a very appealing target. Other peer-to-peer payment networks, like PayPal or Venmo, operate as standalone applications.  

Making matters worse, Zelle itself has no fraud protection mechanisms, which makes it easier for bad actors. For example, scammers can easily collect money for promised items such as concert tickets and then never deliver. According to TechCrunch, one victim told them that “the only thing their bank did was call the seller’s bank to follow up on the matter, and then the victim’s bank sent a letter stating that they would not help. When the victim tweeted to Zelle Support to help in desperation, Zelle only responded by sharing a link that explains why Zelle should only be used with family and friends” Zelle’s Twitter account is full of similar replies to concerned consumers.

Venmo, like Zelle, does not offer buyer and seller protection, but PayPal does. PayPal’s website reads: “If you don’t receive the item that you ordered, or it shows up significantly different from its description, you may qualify for Purchase Protection.” For items covered under this protection the full purchase is refunded plus any shipping costs. However,  not all purchases are covered under PayPal’s “Purchase Protection.” Some excluded items are real estate, industrial machinery, and prepaid cards.

Caution should always be used when receiving calls from financial institutions and when sending money from one person to another, especially when the two parties do not personally know each other.

As reported by NBC, “People need to understand that a third-party company manages these apps,” said Amy Nofziger, director of the AARP Fraud Watch Network. “Even though your bank may advertise them, it’s not managed by your bank, so it doesn’t have the same consumer protections as using a credit card, debit card or even writing a check.”

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