CONCORD, Calif. -- Amid the rise in popularity of quick-pay apps, scammers are also increasingly using digital payment platforms like Zelle to drain victims' bank accounts.
ABC Owned Television Stations first reported on widespread Zelle schemes involving Bank of America customers, but scammers are taking advantage of the platform's instantaneous, irreversible transactions -- and the federal government's ambiguous regulations -- to get more creative in their ploys.
In the latest development, fraudsters are now posing as Wells Fargo bank employees to solicit money.
Our sister station KGO-TV reported that Cynthia Marin of Concord, California, received a text asking if she had approved a Zelle transaction to "TRAVIS" for $3,500. She replied, "No."
Soon after, she received a call from a Wells Fargo number. This was likely an instance of spoofing, meaning the caller deliberately falsified the information transmitted to Marin's caller ID display.
VIDEO: Chase customer loses total of $7,000 in Zelle scam: Here's what you need to know
Marin said the woman on the other line told her that someone was withdrawing money in her name, and she needed to quickly send funds back into her account through Zelle to stop it.
The scammer then instructed Marin to begin the transfer by typing her first and last name in the "Add Recipient" field and leaving the field for her email or phone number blank.
Once the transfer was processed, Marin received a notification from Zelle that "Cynthia Marin" was now a recipient. She also received text notifications that looked legitimate.
"CYNTHIA MARIN sent you $1,000.00 with Zelle. To accept your money, visit: https://enroll.zellepay.com. Reply STOP to end msgs or HELP for help," the text read.
The imposters, however, created a Zelle account in her name and used it to receive those funds.
When Marin checked her Wells Fargo account, only $6 was left.
"The money is gone. Gone. It just disappeared," she said.
"It's just scary. It's a scary feeling," she added.
VIDEO: School nurse falls victim to scam targeting Bank of America and Zelle customers
Scammers also preyed on Kelly Reynolds, of San Jose, California, using a similar technique.
Reynolds told KGO-TV that the scammer not only spoofed the call but gave her the name of a real Wells Fargo bank officer.
The two victims said Wells Fargo did little to help protect their funds. Both filed claims, and both were rejected. Wells Fargo said their Zelle payments were "processed as requested" and therefore a refund would not be processed.
"They truly, truly did nothing," Reynolds said.
"Whether I have $1 in there, or I have a million dollars in there, I should be protected," Marin agreed.
VIDEO: San Francisco man loses half his savings in bank transfer scam
As reports of Zelle scams mushroomed in 2021, Bank of America and others initially refused to offer refunds, claiming that customers "authorized the transactions" and that Zelle was a "third-party app" with "no fraud protections." (Zelle is owned by Early Warning Services, LLC, a private financial services company owned by Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank and Wells Fargo.)
Bank of America had since refunded some customers after KGO-TV reported that the Federal Electronic Fund Transfer Act requires banks to refund consumers for fraudulent money transfers.
RELATED: Banks tell customers they're responsible if they pay Zelle scammers
And unlike credit cards, most quick-pay apps do not offer fraud protection.
"There's virtually no consumer protections on these Zelle transactions. So people started using them, the way you might use a credit card to say, buy tickets for a concert they saw on Craigslist. And that's a terrible idea because there's no way to get the money back," said cybersecurity expert Bob Sullivan.
Advocates say federal laws should protect consumers in these scams since they were tricked into giving away their funds and banks are supposed to protect their customers' accounts.
They want the Consumer Financial Protection Bureau to crack down on banks for not refunding customers or putting more safeguards for Zelle transfers.
"It'll probably take banking regulators years to catch up with what's going on with Zelle," Sullivan said.
And while regulators play catch-up, Zelle continues to grow. Recently, the company reported that 1.8 billion payments were sent in 2021, a 49% increase from a year earlier.
Wells Fargo told KGO-TV that it investigates each individual fraud case. It's full statement is as follows:It's disheartening that scammers are actively pursuing and defrauding victims, and we understand the frustration and anger expressed by victims. We don't want anyone to fall for a scam, and we want to make sure everyone is aware that criminals can spoof a caller ID number so it appears as if a call or text is from your bank. To be safe, don't respond. Reach out to your bank using legitimate sources, such as the number on the back of your debit card.
We are actively working to raise awareness of common scams and to remind customers that Zelle transfers are immediate, and should be treated just like cash. At the same time, we continue to update and strengthen our practices and procedures for combatting and helping prevent scams.
We also are committed to following all regulations governing transactions, including Regulation E. It is a priority for us and our industry.
- When we're notified about a scam, we have a thorough investigative process to research the claim. After we complete our investigation, we report the findings to our customers directly.
- Since Zelle is an immediate form of payment, recovering funds for scam victims typically isn't possible, yet we will work with other financial institutions and law enforcement in an effort to track down suspects and attempt to recover funds for our customers.
- We are unable to discuss information regarding specific customers or our investigative process on claims that are filed, due to customer privacy and confidentiality.